Tesco sales fall amid ‘unprecedented increases in cost of living’

Tesco said sales have fallen at its UK stores in recent weeks as its customers face “unprecedented increases in the cost of living”.

The UK’s largest supermarket said it had gained market share but sales in the three months to 28 May fell 1.5% on the same period last year when the UK was in lockdown.

Ken Murphy, the chief executive of Tesco, said: “The market environment remains incredibly challenging.”

He said it was difficult to separate the significant impact of last year’s coronavirus lockdowns from other influences on shoppers but said Tesco was seeing “some early indications of changing customer behaviour as a result of the inflationary environment”.

He said: “Customers are facing unprecedented increases in the cost of living and it is therefore even more important that we work with our supplier partners to mitigate as much inflation as possible.”

Tesco said sales of clothing and general merchandise, such as homewares and toys, were most affected, while online sales were also affected as shoppers returned to supermarkets. It said the decline in the volume of goods sold was partly offset by inflation.

Sales in the Republic of Ireland were down 2.4% but were up 2% overall because of strong growth in central Europe and at its Booker wholesale chain.

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The retailer’s comments come after more than one in five (22%) of those who took part in a recent survey said they skipped a meal or reduced the size of meals because they could not afford to buy food.

Shop prices rose in May to the fastest rate in more than a decade, according to figures from the British Retail Consortium and NielsenIQ. Food inflation leapt to 4.3% in May from 3.5% in April, the highest since April 2012.

On Thursday the Bank of England warned the headline rate of annual consumer inflation was likely to rise above 11% in October. Inflation is already running at a 40-year high of 9%.

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