Yahoo Finance Cost-of-living crisis may not yet be over, warns Tesco boss
The cost-of-living crisis may not yet be over despite inflation easing, the boss of Tesco has warned.
Ken Murphy, chief executive of Tesco, said it was “too early to call” the end even after the retailer reported record sales over Christmas.
He said: “The sense we get from the consumer is they were really determined to have enjoyed Christmas and they came out in force, and we’re really pleased to see that the rate of inflation continues to fall in food.
“You get the sense that things are balancing out for consumers. So as long as we are in a full employment market, I feel like we’re in a period of relative stability.”
He said he was optimistic about the impact of the coming rise in the National Living Wage, but cautioned over any potential knock to employment rates as a result.
“The critical thing is that we maintain to the greatest extent possible in this country, full employment. That’s crucial, and as long as we can do that, then I am cautiously optimistic about the outcome.”
It comes as Tesco emerged as one of the retail sector’s biggest winners over Christmas after sales rose 9.2pc over the four weeks to December 25, with Tesco hailing a 16.7pc surge in sales of its premium Finest products.
Mr Murphy said the supermarket had seen an increase in the volume of products sold.
Tesco upgraded its profit forecasts for the year following the strong festive trading. It now expects to make as much as £2.75bn, up from previous expectations of between £2.6bn and £2.7bn.
Mr Murphy said the retailer prioritised rolling out 550 new festive products ahead of Christmas.
In a bid to attract shoppers away from discounters Aldi and Lidl, Tesco also slashed around 2,700 prices over the period and increased offers across its Clubcard loyalty scheme.
Mr Murphy said: “As part of our focus on value, we offered a full Christmas dinner for just £2.09 per person, helping to drive record sales in the weeks leading up to Christmas and further market share gains.”
He added: “Our commitment to be the cheapest full-line grocer in the country is absolutely resolute. That’s what we’re all about. We’ve been that way for 14 months and my commitment is we will continue to be so for the foreseeable future.”
The latest data shows that Tesco ended the year accounting for 27.6pc of the grocery market, which was higher than at the beginning of 2023 after it held off advances from Aldi and Lidl.
Sales across Tesco’s business – which includes the wholesaler Booker – rose by 6.6pc over the 13 weeks to November 25.
Tesco’s update follows that of rival Sainsbury’s, which posted a boost in food sales of 8.6pc over Christmas as it highlighted record sales of sparkling wine, mince pies and pigs in blankets.
Sainsbury’s also saw a rise in sales of its premium Taste the Difference products, which rose 13pc over the festive period.
However, the supermarket was held back by a dip in sales of electronics, clothing and other general merchandise, which sent its share price falling by more than 5pc on Wednesday.
Despite upgrading its forecasts, shares in Tesco were down by almost 1pc on Thursday.
