Too early to say if cost of living squeeze is 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, the 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 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.

He said: “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.”

Tesco emerged as one of the retail sector’s biggest winners over Christmas after sales rose 9.2pc over the four weeks to Dec 25, with a 16.7pc surge in sales of its premium Finest products.

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 festive products ahead of Christmas. In an attempt to attract shoppers away from discounters Aldi and Lidl, Tesco also slashed 2,700 prices 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.” The latest data show that Tesco ended the year accounting for 27.6pc of the grocery market, which was higher than at the beginning of 2023.

Sales across Tesco’s business – which includes the wholesaler Booker – rose by 6.6pc over the 13 weeks to Nov 25.