Tesco says food inflation falling as it cuts price on 2,500 items | Tesco

Tesco says food inflation has fallen in the past six months, with the grocer cutting prices on 2,500 products, including bread and broccoli, by an average of 12%.

The supermarket also revealed a 14% rise in adjusted operating profit and said it expected the pace of prices rises to continue slowing for the rest of the year.

On Tuesday the British Retail Consortium revealed that food prices dropped in the UK in September for the first month in almost two years, raising hopes that a peak had been reached in soaring grocery price inflation. However, food prices are still 9.9% higher than a year ago as the price of many kitchen staples continues to rise.

Supermarket price wars helped food inflation fall, analysts say.

Ken Murphy, Tesco’s chief executive, said: “Food inflation fell across the half and while external pressures remain, we expect that it will continue to do so in the second half of the year. We are in a strong position to keep investing for customers, and will continue to lower prices wherever we can.”

The retailer said it had introduced more affordable own-brand products in its smaller city centre Express stores, which are up to 40% cheaper than the items they replaced.

At the same time, Tesco reported strong growth in its upmarket Finest range as shoppers look to treat themselves at home. It launched more than 150 new Finest products, and said it had won customers from premium retailers, such as Waitrose.

The retailer made an adjusted operating profit of £1.5bn in the first half of the year, up 14% from a year earlier. Pre-tax profit jumped to £1.2bn from £396m because of a £626m impairment charge last year.

Food sales grew by 10.6%, as Tesco launched 335 new products, including the Finest Summer Selection and Asian ready meal ranges and improved 1,150 own-brand products, including the fresh fish and pasta ranges.