Tesco boss Ken Murphy said today the dismal British weather had made a much bigger impact on consumer spending than the war in Iran.
The supermarket giant revealed first-quarter like-for-like sales in the UK grew by 1.8%, although Murphy stressed that was against a period last year which included a summer heatwave and major turnaround problems affecting rivals such as Asda.
“The biggest impact on the market has been the weather,” Murphy said. “That is the single biggest factor.
“We had such an outstanding season last year. We had something like 22 out of the first 26 weeks sunshine last year. This year seems like it’s been 22 out of 26 weeks of rain.”
The Tesco CEO also said he was standing by his call that predictions of food inflation soaring to up to 10% by the end of the year were overblown. With yesterday’s ONS figures showing the biggest slowdown in food prices for six months, he said it was confident there would not be the big jump in inflation some had feared.
With news that the US and Iran have signed a peace deal including the reopening of the Strait of Hormuz, Murphy said: “There’s no doubt that the war in the Middle East is impacting consumer sentiment, but that sentiment is driven more by what might have been rather than what has happened.
“Inflation hasn’t really materialised. We haven’t seen that translate into actuality.
“Food prices are incredibly competitive. We’re going to be doing everything in our power to minimise the impact on consumers.”
The IGD this week forecast food inflation would peak at 5.5% in the second half of the year, which was significantly below the 8% “severe” energy shock scenario. However, it warned that the impact on food prices due to increases in fuel cost and other factors could drag on into 2028.
However, Murphy said doom and gloom around inflation was not reflected in Tesco’s forecasts.
“We said we don’t see anything like that and we continue to stick to that view.
“I’m opimistic but clearly it’s an ongoing thing and will depend on what happens to commodities, it’s not just the war in the Middle East.”
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