Tesco achieved zero inflation in its prices in the 24 weeks to August 9 and there will be no let up in the downward pressure on prices, warned finance director Andrew Higginson.

Speaking at the announcement of its interims last week, Higginson said like-for-like sales for the period increased by 6.3%, and 6.2% of that growth was down to increased volumes.

He said the 0.1% growth in prices over the period was entirely due to increases in the cost of petrol, and the instore inflation rate was zero.

“We will continue our efforts to keep taking prices down,” he added. “We will look for new efficiencies in the supply chain and the way we
operate.” Chief executive Sir Terry Leahy also revealed there would be no let up in the group’s pressure on the c-store sector. He said the T&S estate bought last year was trading strongly and that Tesco intended to convert 136 of the One Stop stores to the Express fascia this year.

Stores that had already been converted were showing sales increases of up to 90%, he added.

Once Tesco had completed its conversion programme of about 450 One Stop stores, Leahy said he expected Tesco would continue to add about 50 to 75 more Express stores per year and he added: “I believe there is potential for more than 1,000 Express stores in the UK.”

Sir Terry emphasised the group’s growth in non-food, but said that as it only had 4.4% of the UK non-food market there was great scope for growth. Tesco accounted for 12.3% of sales in the whole UK market and would increasingly benchmark itself against the total market, he said.

Overall UK sales were up 14.2% to £12bn compared with the same period last year, and the operating profit was up 16.2% at £624m.

Overseas sales were up 30% to £3bn, with operating profit up 66% to £98m. Group sales were up 17% to £14.9bn and operating profit was up 16.9% to £692m.