Tesco was observing early indications that customers were purchasing cheaper brands of bread and pasta, two staples whose prices had risen substantially this year.
The chief executive officer of the grocery store cited skyrocketing cost-of-living rises as a primary cause for shoppers’ reduced spending.
Comparing March through May of this year to the same time in the previous year, the company’s revenues in the United Kingdom decreased by 1.5 percent.
As the Bank of England forecasts that inflation will reach 11 percent this Autumn, putting pressure on households not seen since the 1970s, Tesco CEO Ken Murphy sees evidence of a shift in consumer behavior.
“Although difficult to disentangle from the considerable impact of lapping last year’s lockdowns, there are early indications of a shift in customer behavior as a result of the inflationary climate,” Mr. Murphy stated.
Customers are experiencing significant rises in the cost of living, making it all the more vital that we collaborate with our supplier partners to reduce as much inflation as possible.
Friday morning, the chief executive reported to analysts that the supermarket was experiencing an increase in consumer shopping trips but a decrease in basket size.
He added that Tesco was observing early indications that customers were purchasing cheaper brands of bread and pasta, two staples whose prices had risen substantially this year.
Dan Lane, the senior analyst at Freetrade, stated, “Aldi is a greater threat than ever.”
“Inflation-induced belt-tightening will undoubtedly send a few additional German households to cheap retailers. All four major supermarkets have lost market share this year, while the challengers have gained, and this may be only the beginning.”
The news comes one day after an industry group issued a warning that food inflation will rise this summer and remain elevated until the middle of next year.
In the following months, the Institute of Grocery Distribution predicts that food inflation will peak at 15 percent, driven by meat, cereal, dairy, and fruit and vegetable items.
In January of next year, the average monthly grocery bill for a household of four is projected to reach £439, up from £396 in January of this year.
It was predicted that as a result of the broader cost-of-living crisis, there would be an increase in “food stress” among the poor.
As a result of Russia’s war in Ukraine, worldwide wheat prices have skyrocketed, resulting in significant price increases for meats such as poultry that rely on wheat for nutrition.
Brexit and COVID-related supply chain disruptions are also influencing prices, the firm claimed.
According to the most recent official data from the Office of National Statistics, the rate of grocery inflation is just under 7 percent.
