// Tesco’s pre-tax profits have fallen almost 64% in the first half of its financial year

// Sales in the last six months rose 6.7% to £32.5 billion at the UK’s biggest grocer

Tesco expects full-year profit to fall at the lower end of its guidance, as profits slump amid unprecedented inflationary pressures and subdued shopper sentiment.

The country’s largest supermarket posted a £413m pre-tax profit in its first half, down 64% on the previous year when shoppers flocked to supermarkets amid Covid lockdowns.

Despite the profits plunge, sales rose 6.7% in the last six months to £32.5 billion as it pledged to “support customers through relentless focus on value”.

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Tesco flagged “significant” cost inflation, with some customers shifting from branded ranges to own brand goods as they tried to manage household budgets.

However, like-for-like UK sales did edge up 0.7% year-on-year and were 10% above pre-pandemic levels.

The supermarket said it was competing against strong sales a year ago, when the Covid-19 lockdown led to “exceptionally strong demand”.

Various offers, including its Aldi Price Match and lower prices for Clubcard members, helped ease cost-of-living pressures.

The grocery giant also unveiled ”a vast new price-lock commitment” while revealing it has increased hourly-pay pay for the second time this year as the cost of living crunch hits both consumers and colleagues.

From 13 November, the basic hourly rate of pay in stores will increase by 20p to £10.30 (or £10.98 in London), making a total 8% increase in pay this year.

Tesco is also freezing prices on more than 1,000 products.

Chief executive Ken Murphy said: “We know our customers are facing a tough time and watching every penny to make ends meet.

“By staying laser-focused on value and sticking to our strategy of inflating a little bit less and a little bit later, our price position has got even more competitive. Customers are seeking out the quality and value of our own brand ranges as they work to make their money go further, whether they are switching from branded products, between categories or cutting back on eating out.”

Murphy said that cost inflation “remains significant” as it looks to the second half and that it was too early to predict how customers will adapt to this.

“Despite these uncertainties, our priorities are clear.  We have the right long-term strategy and we will continue to balance the needs of all of our stakeholders.

“Most importantly, we will stay focused on delivering value for our customers and supporting them in every way we can.”

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