Every little helps: news from Tesco it is seeing early signs of price rises starting to slow will be received gratefully by households feeling squeezed on all sides.
AJ Bell’s Russ Mould said: “It may also help reduce some of the recent political pressure on the sector as the finger was pointed at the supermarkets as one of the culprits behind the soaring cost of a weekly shop.
“Given the UK groceries sector has steadily reduced the proportion of people’s outgoings which go on food over several decades and these companies still generate razor-thin margins this charge always felt a bit of a stretch. However, politicians do not always make rational decisions and talk of price controls had been floated.
“Perhaps supermarkets have been a bit sluggish in passing on falling wholesale costs, with inflation still the main driver behind Tesco’s sales growth. In other words, it is not seeing growing volumes and that helps explain why the company is not upgrading profit forecasts despite the strong sales performance.
“The company’s scale continues to provide benefits and it is largely defending its leading market share position, while its wholesale business Booker is continuing to perform strongly.”