Tesco says ‘uncertainty’ attributable to Middle East warfare is weighing on outlook for the 12 months

The boss of Tesco has said it is ‘doing whatever we can’ to keep food prices down as the war in the Middle East creates ‘further uncertainty’ in its outlook for the year. 

Britain’s largest supermarket reported stronger-than-expected profits in the year to 28 February, the first day of the Iran war. Adjusted operating profits came in at £3.1billion, beating forecasts of between £2.9billion and £3.1billion. 

But Tesco said it is providing a ‘wider range of guidance than we were previously planning’ due to ‘the increased uncertainty’ caused by the war – predicting adjusted operating profit of between £3billion and £3.3billion. 

Boss Ken Murphy said: ‘We are committed to doing whatever we can to help keep down the cost of the weekly shop, and with the conflict in the Middle East creating further uncertainty for consumers and the economy more broadly, that commitment matters more than ever.’

He added: ‘Much will depend upon the duration of the conflict and in particular, the potential implications for UK households and the economy more broadly.’ 

Tesco has warned of uncertainty caused by the Middle East war on its outlook for the year

He said there had not been any ‘meaningful change’ in customer behaviour since the outbreak of the war, but trends such as shoppers wanting to eat healthier and dine at home instead of restaurants are continuing.

The Food and Drink Federation has warned that food inflation could hit 10 per cent by the end of the year as supply chain disruption and higher fuel costs weigh on producers.

He said Tesco had not yet seen any ‘meaningful’ increases in the supply chain as of yet, apart from cost increases to fuel, and he did not want to ‘speculate’ on when price rises could filter through to tills.

‘Don’t forget, we’re four years into a cost of living crisis, so it’s been something that’s been an ongoing capability,’ he said.

And Murphy said the supermarket had built on its position as Britain’s biggest supermarket ‘despite an increase in competitive intensity’ over the past year.

Tesco sales rose 4.6 per cent to £66.6billion, while free cash flow rose 11.8 per cent to £2billion, as it continued to poach customers from rivals ‘despite cost pressures from new regulation.’