Tesco CEO Rejects 10% Food Price Hike Claims Amid Iran Conflict
The chief executive of Tesco has issued a firm denial regarding claims that UK food prices could surge by almost 10% this year, despite ongoing economic uncertainty linked to the war in Iran. Ken Murphy, the supermarket giant's CEO, stated he "did not recognise" suggestions by the Food and Drink Federation (FDF) that prices would rise by more than 9% in December.
Supermarket Giant's Reassuring Message
Mr Murphy emphasised that Tesco will do "whatever we can" to keep food prices low for shoppers. He reported that, excluding fuel, the company has not observed any impact on product availability or prices since the Middle East conflict began in February. "We haven't seen any issues and are in very strong shape," he told reporters, adding that constant dialogue with suppliers has revealed no raised concerns.
FDF's Inflation Projections
The FDF, representing approximately 12,000 UK food and drink manufacturers, projected that food and non-alcoholic drink inflation would climb above 9% by year-end, contrary to earlier expectations of easing to 3.2%. This forecast assumes:
- Iran's vital Strait of Hormuz shipping route reopening within two to three weeks
- Key facilities, including oil and gas sites, returning to normal within a year
Fuel Prices and Profit Outlook
Despite fuel prices increasing in recent months due to the conflict between US-Israeli and Iranian forces, Mr Murphy asserted Tesco remains "competitively stocked" with fuel and in "good shape" to manage ongoing disruptions to shipping and energy production. However, Tesco warned of a potential profit dip in coming months after reporting stronger-than-expected adjusted operating profits of £3.15 billion for the year to February 28.
The retailer informed shareholders it expects profits between £3 billion and £3.3 billion this financial year, providing a wider guidance range due to uncertainty from the Iran conflict. Additionally, Tesco plans to achieve £500 million in cost savings in 2026/27, following last year's £535 million savings target.
Commitment to Customers
Mr Murphy reiterated Tesco's dedication to affordability: "We are committed to doing whatever we can to help keep down the cost of the weekly shop, and with the conflict in the Middle East creating further uncertainty for consumers and the economy more broadly, that commitment matters more than ever." He highlighted increased investments in low prices, quality, and service over the past year, leading to the company's highest market share in over a decade.
