Tesco, a major retailer, has observed initial indications of inflation beginning to alleviate

The CEO of Tesco has expressed optimism regarding “encouraging early signs” indicating a slowdown in price increases, coinciding with the company’s announcement of higher sales.

During the three months leading up to the end of May, the supermarket reported a 9% increase in UK sales compared to the previous year, reaching £10.8 billion.

Households have been grappling with surging prices, as food inflation surged to 19.1% in the year up to April.

Tesco CEO Ken Murphy acknowledged his awareness of the cost of living pressures that shoppers are currently facing.

Contrary to accusations of profiteering, the supermarket’s CEO denied such claims and emphasized that there are positive indications of inflation beginning to ease across the market.

Food retailers have faced criticism of “greedflation,” accused of increasing prices to boost profits. Additionally, the competition watchdog is investigating whether a lack of competition resulted in customers being overcharged.

In response to accusations of profit-boosting during a period when households are experiencing the strain of rising prices, Sainsbury’s retaliated last month.

According to Charles Allen, a retail analyst at Bloomberg Intelligence, inflation played a significant role in Tesco’s recent figures, as he stated in an interview on the BBC’s Today program.

During the discussion, the statement underscored the distinction, emphasizing that although the decline in top commodity prices is significant, lower inflation should not be equated with deflation. Instead, it indicates a deceleration in the rate of price increases rather than a decrease in prices.

Although there has been a decline in overall inflation to 8.7% in recent months, the rate of increase in food prices has not decreased at the same pace.

The Bank of England, responsible for determining interest rates, has previously cautioned that surging food expenses, driven by rising energy costs impacting food production, will likely result in prolonged higher prices.

Just a few days ago, Andrew Bailey, the Governor of the Bank of England, remarked that inflation is persisting for a longer duration than initially anticipated.

Despite previous assurances from the Bank’s contacts in the retail industry that prices would decrease, Andrew Bailey noted that British food price inflation has been slower to decline compared to global commodity prices.

Bailey highlighted the discrepancy between expectations and actual outcomes by stating, “We have received consistent information that commodity prices have peaked and would subsequently decrease, resulting in a decline in the inflation rate. However, the feedback from our contacts indicates a misjudgment of the situation.”

UK supermarkets have indicated that there is usually a delay of three to nine months before price reductions are observed in stores.

Mr. Murphy from Tesco expressed his belief that the Bank of England was unjust in attributing the persistence of high inflation solely to supermarkets.



Source : bbc.com

By Ryan

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