Tesco said sales at the supermarket giant have fallen as “unprecedented increases in the cost of living” are noticed across the country.
Aiming at an “incredibly challenging” business environment, the company saw sales in the UK fall 1.5% between March and May compared to the same period last year.
As the Bank of England warns that inflation will reach 11% this fall under pressure on households that has not been seen since the 1970s, there are indications that consumer behavior is beginning to change, according to the Bank of England. head of Tesco, Ken Murphy.
“While it’s hard to separate from the significant impact of overcoming last year’s blockages, we’re seeing some early signs of changes in customer behavior as a result of the inflationary environment,” Murphy said. .
“Customers are facing unprecedented increases in the cost of living, so it’s even more important that we work with our supplier partners to mitigate as much inflation as possible.”
Image: CEO Ken Murphy said there were indications that consumer behavior was beginning to change in response to inflation
The chief executive told analysts on Friday morning that the supermarket was seeing more shopping trips from its customers, but smaller baskets.
He added that Tesco was seeing the first signs that shoppers were buying cheaper brands of bread and pasta, two products that have risen sharply in price this year.
“Aldi is a bigger threat than ever,” said Freetrade senior analyst Dan Lane.
“Make no mistake, the tightening of the inflation-induced belt will cause some more homes to go to a German discount. All four big ones have bled market share this year, while challenging shopkeepers have won, that could only be The beggining”.
The news comes a day after an industry group warned that food inflation will accelerate over the summer, and higher prices are expected to remain until the middle of next year.
Image: Bread prices have risen by up to 50%, driven by Russia’s invasion of Ukraine
The Food Distribution Institute has forecast a 15% peak in food inflation in the coming months starring meat, cereals, dairy, fruit and vegetables.
His study predicted that the average monthly expenditure on groceries for a family of four would reach £ 439 in January next year, up from £ 396 in the same month this year.
The result, he said, would be an increase in “food stress” already evident among the most disadvantaged due to the wider crisis of the cost of living.
Some of the largest increases in the cost of wheat-dependent meat for food, such as poultry, are due to rising world wheat prices caused by the Russian war in Ukraine. .
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2:13 The cost of cheaper supermarket pasta has doubled in one year as rising inflation affects the price of low-cost groceries.
The group said Brexit and disruption of the COVID-related supply chain are also affecting prices.
The latest official figures from the National Statistics Office put the rate of food inflation at 7%.