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STORY: Walmart shares surged to a record high Thursday morning - jumping as much as seven percent after it raised its full year forecast and posted quarterly sales and profit that topped expectations.

The largest U.S. retailer is betting that easing inflation will drive stronger sales of groceries and non-essential merchandise like clothing and electronics.

Walmart's solid performance could lessen some investors' fears about ebbing U.S. consumer spending.

One longtime Walmart analyst told Reuters this was about as good a quarter as he could remember.

U.S. comparable store sales excluding fuel rose nearly four percent when analysts were looking for a hair over three percent.

During a post-earnings call, Walmart's finance chief said that inflation on its product range increased by about 0.4% in the quarter and anticipates similar inflation levels to persist throughout the rest of the year.

Online sales in the United States surged 22%, surpassing the 17% growth it posted during the typically robust holiday season.

Walmart attributed this to households making more than $100,000 per year.

Americans have generally managed to navigate through higher prices, but prolonged inflation has sparked worries lower-income consumers might be more pressured and slow down in spending.

They maintained their spending levels during the quarter, but are looking for cheaper products.

Walmart also said shoppers were increasingly making food at home rather than eating out and were really attracted to the 45% increase in price cuts that it offered on food and consumables in April.