The boss of the UK’s biggest retailer says it is “inflating prices a little bit less and a little bit later” than the competition as families’ budgets are squeezed.
Tesco chief executive Ken Murphy made the claim as the chain revealed first half profits that reflected, it said, its decision to maintain the best value possible for the customer as the cost of goods spiked amid the cost of living crisis.
Underlying retail operating profits fell 10%, the company said, to £1.25bn for the six months to 27 August.
It warned that, as a result of “significant” inflation pressures and consumer caution, annual profits would likely be at the lower end of its earlier guidance of between £2.4bn and £2.5bn by the same measure.
It reported that shoppers were trading down to own label products and frozen food, and buying fewer non-food products .
Tesco said contributing to that profit guidance too was a decision to freeze prices on more than 1,000 everyday goods.
More from Business
It also revealed a second pay rise of the year for its staff amid pressure from unions which had declared that the UK’s grocery market leader had slipped behind rivals.
Shopworkers’ union Usdaw said that Tesco’s hourly-paid retail and customer fulfilment centre staff would receive an additional 20p per hour increase from 13 November, taking the base rate from £10.10 to £10.30 per hour.
Advertisement
This was on top of an increase in July of 5.8%, taking the overall increase this year to 7.85%, it said while welcoming the move.
Tesco, like Sainsbury’s, Asda and Morrisons, have been battling since the financial crisis a challenge to their dominance from discounters Aldi and Lidl.
Please use Chrome browser for a more accessible video player
0:20
‘Inflation is going up across the economy’
Industry data from Kantar Worldpanel last month showed Aldi had overtaken Morrisons as the fourth largest chain by market share.
Tesco recorded UK like-for-like sales growth of 0.7% over the six months – recovering from a 1.5% decline in the first quarter – potentially reflecting a greater desire by shoppers to rein in their spending outside the home as energy and other costs surge.
Mr Murphy told investors: “We know our customers are facing a tough time and watching every penny to make ends meet.
“That’s why we’re working relentlessly to keep the cost of the weekly shop as affordable as possible, with our powerful combination of Aldi Price Match, Low Everyday Prices and Clubcard Prices, together covering more than 8,000 products, week in, week out.”
“By staying laser-focused on value and sticking to our strategy of inflating a little bit less and a little bit later, our price position has got even more competitive,” he added.
Shares – down by more than a quarter in the year to date – fell by 1.5% at the market open.
People whose homes have been destroyed by the floods sweeping across parts of the UK over the past couple of days have been telling Sky News how they coped with the deluge.
In Lincolnshire, where a major incident has been declared, Terry, from Grantham, showed a Sky crew the aftermath of the deluge in his home, which was left under two feet of water.
“Everything’s gone,” he said, adding that he was “devastated”.
The first sign of trouble came at lunchtime on Monday, when his wife woke him and said there was water coming in [to the house], and “within a few minutes, the whole house was flooded”.
They rushed their belongings and pets upstairs, he said, as he revealed the damage to the flooded living room and kitchen, where the water mark was above a power socket.
Terry said the kitchen, where the floor was covered in sludge, smelled of mud and sewage, and their furniture and carpets were wrecked.
More on Floods
Related Topics:
They have no electricity and the food in the cupboards and freezer was “completely ruined”.
Graham Johnson, who lives in a boat with his wife and dog, in the village of Barrow upon Soar in Leicestershire, was in the pub on Monday night, before the water started to rise “rapidly”.
People living in a local caravan park were moved as a severe flood warning was issued.
Mr Johnson said he had gone out “for a couple of pints as usual and, the next thing we know, bingo”.
The couple feared their boat home was about to be swept towards the bridge.
“That’s our pride and joy, where we live, and we didn’t want to lose it,” he said, as he praised the “fantastic” emergency services, who rescued them and their dog after a nervy three-hour wait.
They were two of the 59 people rescued by firefighters in the county, where a major incident was declared and crews were called out to 160 flood-related incidents, the Fire Brigades Union (FBU) said.
Another Leicestershire resident whose home was inundated was Qasim Abdullah from Loughborough.
Please use Chrome browser for a more accessible video player
0:53
Flooding across East Midlands
Pictures taken by the Associated Press show him walking through almost knee-deep water in his living room.
In nearby Quorn, businesses have shut as the main high street has flooded for the second time in as many years.
Two of the pubs in particular have been damaged.
Last year, residents had to launch a crowd fundraiser to help pay for the costs of renovation. Not to mention soaring insurance premiums.
Indy Burmi, who owns a hair salon and restaurant, hasn’t suffered flooding, but said he’s had to close up and cancel all Tuesday’s reservations, as his clients simply can’t get into the village.
And, with more rain forecast, conditions could get even worse in the short term, while residents worry that an annual battle with rising water is now the new normal.
Elsewhere in the UK, the next danger is from ice forming on untreated surfaces after rain on Tuesday evening, the Met Office has said, as it issued a new warning for northern England and Wales from 5pm until midday on Wednesday.
The Royal Liverpool University Hospital has declared a critical incident due to “exceptionally high” demand on A&E and patients being admitted to wards.
The hospital said there had been a spike in people with flu and respiratory illnesses going to emergency departments in recent weeks.
A spokesperson for the hospital said it had a “comprehensive plan in place” and was “taking all the necessary actions to manage the challenging circumstances”.
“We are working with partner organisations to ensure those that are medically fit can leave hospital safely and at the earliest opportunity,” they added.
The hospital warned some people would experience delays as it prioritises the sickest patients.
People whose case isn’t an emergency are being asked to see their GP, pharmacy or walk-in centre – or call the 111 service for advice.
More on Liverpool
Related Topics:
The Royal Liverpool University Hospital is in the city centre and is the biggest hospital in Merseyside and Cheshire.
Declaring a critical incident can happen when a hospital is experiencing exceptional demand, or sometimes if there is a serious problem with staffing levels.
It indicates it can’t function as normal and allows it to take extra measures to protect patients, such as prioritising the most unwell people and getting support from other agencies.
It could last hours, a few days, or weeks if necessary.
A critical incident was also declared on Friday by the NHS Cornwall and Isles of Scilly Integrated Care Board.
It said it had seen almost four times as many inpatients compared with last year and urged people with flu to avoid going to A&E.