Tesco has warned that heightened geopolitical uncertainty is beginning to weigh on consumer sentiment, although Britain’s largest supermarket group said the conflict in the Middle East has not yet translated into higher food prices or a significant shift in shopping behaviour.
The retailer reported a slower-than-expected increase in quarterly sales on Thursday, with chief executive Ken Murphy saying households were becoming increasingly concerned about the potential economic fallout from the conflict.
“The war in the Middle East has impacted consumer sentiment, more to do with fear about what might happen,” Murphy said.
However, he added that the impact on actual spending patterns remained limited, with no “material” change in consumption so far.
The comments come as energy markets continue to monitor the impact of instability in the region, with higher oil and gas prices raising concerns over renewed inflationary pressure across global economies.
Tesco said it had yet to see a meaningful impact on food prices, noting that inflation across its grocery operations remained below the 2.2 per cent rate reported by the Office for National Statistics this week — the lowest level since 2024.
The supermarket group said price inflation over the latest three-month period had also moderated compared with the previous quarter.
The figures provide some relief for policymakers and investors after the Institute of Grocery Distribution warned that food inflation could accelerate to 5.5 per cent later this year.
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