// Tesco boss Ken Murphy remains upbeat on trading as customers prove to be resilient in the face of inflation
// Murphy said he “thinks and hopes” inflation will ease in the second half of the year
Tesco boss Ken Murphy has revealed that the consumer has remained resilient post-Christmas and is spending as normal in January.
Quashing fears of a slowdown in consumer spending after a decent Christmas across retail, Murphy revealed that performance had been “pretty good” post-christmas, and akin to a normal January.
The retail boss said customers are continuing to spend but are expressing a “sentiment of cautious optimism”.
“Customers are weathering the storm in a full employment market and the recession might be shallower than predicted,” he said.
Murphy also said that light was on the horizon in terms of inflation easing.
The grocery boss said he “thinks and hopes” that food inflation, which was at a record high last month, will begin to ease in the second half of the year.
Murphy’s prediction marries with that of Sainsbury’s boss Simon Roberts, who yesterday said he expected inflation to come down by “the middle point of the year”.
Tesco CFO Imran Nawaz added that there were “green shoots” in terms of freight and some commodity prices, which sparked hopes that the end of prices rises was in sight.
Murphy added that Tesco is doing what it can to keep prices low, although he warned that inflation hadn’t peaked quite yet.
“We want to give customers reassurance that they won’t see price rises every week, but I can’t legislate for what’s going to happen in April because it depends on what’s happening with energy prices,” he said.
Add
Subscribe to Retail Gazette for free
Sign up here to get the latest news straight into your inbox each morning
Trading down
In the face of rising inflation, trading down was a trend at Tesco throughout the festive period, although Murphy said its more premium lines also saw growth.
“We have seen customers continuing to trade down but that has taken a number of different forms,” he said.
“For some customers, it’s trading down from national brands to great value Tesco products; for others it is seeking out Tesco from the higher-price premium-focused retailers, or using our great range of ready meals to substitute for a takeaway or restaurant meal.”
The grocery giant unveiled a 7.8% sales jump in the UK and Ireland over Christmas, which took sales over the quarter to 7 January to up 6.1% on last year.
It insisted it was the only full-line grocer to increase market share against pre-pandemic levels. Tesco said it was gaining customers from other traditional grocers.
Tesco said it took business from rivals with the exception of the discounters Aldi and Lidl.
