Tesco is trying to “lower prices wherever we can” as customers grapple with cost of living pressures, the UK’s biggest supermarket chain has said. Boss Ken Murphy added that the pace of rising food prices would continue to slow this year, easing the pressure on households.
Tesco reported a big jump in profits for the first half of the year as wholesale food costs came down. It said customers were also buying more own-brand products to save money.
“We know how challenging it is for many households across the country, as they continue to grapple with ongoing cost of living pressures,” Mr Murphy said. “We are committed to doing everything we can to drive down food bills.”
In the six months to the end of August, Tesco’s sales were up by 8.4% compared with the same period last year, mainly due to higher prices. Its retail profits rose by 13.5% to £1.4bn, as the grocer cut its own costs and attracted more customers.
Global food prices surged after Russia’s invasion of Ukraine last year, driving up the cost of a weekly shop.
But the pace of price rises, while still high, has started to ease, with supermarkets cutting the costs of some basics like milk, cheese and vegetables.
Mr Murphy told the BBC consumers were starting to see “stability in pricing and actually they’re starting to see prices coming down”. He said customers had been switching to Tesco’s own-brand products to save money, including “treating themselves at home” with own-label premium products.
Shoppers have also been switching to Tesco from premium retailers, he added.
Mr Murphy said consumers were likely to feel more confident as Christmas approached. “We think the customer is in good shape for this Christmas,” he said.
Back in April, Tesco forecast it would struggle to increase profits this year. But the chain has now raised its annual profit forecast, saying it expects retail profits to be between £2.6bn and £2.7bn, up from a previous forecast of £2.5bn.