Food price inflation is easing off at last, says Tesco chief

Tesco has said that food inflation has dropped in the past six months and will continue falling, with the supermarket cutting prices on 2,500 products, including bread and broccoli, by an average of 12%.

- Julia Kollewe

Its chief executive, Ken Murphy, said customers were becoming more optimistic about the future, with worries over mortgage rates and grocery bills starting to ease. "I'm sure that it will be still challenging for a number of families," he said. "But overall we think the customer is in good shape for this Christmas." 

Revealing a 14% rise in adjusted operating profit, the retailer said it had reduced prices on pasta, oil, and dairy products such as cheese, milk and yoghurt over the summer. However, some products are still going up in price, such as meats including chicken, and potatoes.

"We've seen inflation come down progressively over the last six months, which gives you a clear indication that our suppliers are working closely with us to try to drive down costs," Murphy said. "And where you're seeing some of the more extreme cost increases over the last 18 months, we're starting to see costs come down."