Tesco boss Ken Murphy today said the supermarket was fighting a “constant battle” with suppliers to keep prices down, amid a torrent of CPI requests.
However, Murphy insisted suppliers were fully behind Tesco’s price lock, which saw 1,000 prices frozen earlier this month until Easter.
Speaking after Tesco announced UK like-for-like sales were up 7.2% in the six weeks to 7 January, with sales of fresh food up 8.1%, Murphy claimed Tesco had delivered its “most competitive offering to date” over the Christmas period. “We are battling to keep prices down,” he said at this morning’s results call. “It’s an ongoing struggle but we’re doing our best.”
“All the suppliers that have supported our price lock are 100% behind us. It’s part of the normal cut and thrust of business.”
Murphy added: “Our suppliers recognise that they need to protect volumes. That’s the philosophy behind price lock and that’s been working.”
Asked how long he thought inflationary pressure on food prices would would continue, Murphy said he said he was hopeful it would begin to fall in the second half of the year. However, he stressed that depended on world events, including the war in Ukraine and energy prices.
“We’re not sure it’s peaked just yet. Inflation is impacted by a range of factors: the war in Ukraine, energy prices, harvest yields, they are all going to be a factor.
“I can’t legislate for what’s going to happen but we hope that in the second half of the year we’ll start to see inflation come off.”
Meanwhile, Murphy said Tesco had seen little impact over Christmas from the government’s ban on HFSS promotions in prominent store locations, which came into force in October.
He told The Grocer: “In truth we didn’t see a major impact. People were shopping for those treats and they were able to find them.”
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