Tesco boss: Early signs that food inflation is starting to ease

The boss of Tesco has said there are “encouraging early signs that inflation is starting to ease” after shoppers faced soaring food prices.

Ken Murphy, chief executive of the UK’s largest grocery chain, stressed that customers “continue to face significant cost-of-living pressures” but provided further optimism that rampant food inflation could have passed its peak.

The most recent official data showed that food inflation struck 19.3% in April, dipping only slightly from March’s eye-watering 19.6% and remaining close to the highest rate for more than 45 years.

Tesco said it has seen reductions in the price of milk, bread and pasta over the past month.

However, bosses cautioned that it is still facing persistent increases in the commodity prices of other popular products, such as potatoes and rice, which it said fluctuate due to weather conditions and crop yields.

The significant rise in food inflation led to reports last month that Downing Street was drawing up plans to encourage supermarkets to introduce voluntary price caps on food staples in a bid to help with the cost-of-living crisis.

Mr Murphy told reporters on Friday that the supermarket had not held recent talks with Government over this and defended pricing in the sector.

“Grocery retail in the UK is widely held as one of the most fiercely competitive markets in the world, and these internal competitive mechanisms keep our pricing very sharp,” he said.

“I will say that we haven’t had any recent discussions with Government around price caps and I don’t know where the status of that is.

“We are confident that we already provide a very competitive environment on pricing, and will continue to do so.”

It came as the supermarket group reported total sales of £14.8 billion for the 13 weeks to May 27, with a like-for-like sales increase of 8.2% against the same period last year.

Its UK division saw a like-for-like sales rise of 9% after it said it saw benefits from customers switching “from premium retailers” amid pressure on consumer budgets.

Mr Murphy said: “We are pleased with our performance in the first quarter, underpinned by our relentless focus on value.

“Customers continue to recognise our leading combination of great value and quality in every part of their basket – from essentials covered by our Aldi Price Match, through to our growing Finest range.

“We are very conscious that many of our customers continue to face significant cost-of-living pressures and we have led the way in cutting prices on everyday essential items.

“There are encouraging early signs that inflation is starting to ease across the market and we will keep working tirelessly to ensure customers receive the best possible value at Tesco.”

The retailer added that it is “well-positioned for the months ahead” and held firm on previous financial guidance.