Tesco sales hit by plunging food inflation
Supermarket giant Tesco said today that UK sales growth almost ground to a halt in the last three months as the grocer wrestled with plunging food inflation.
The firm said UK like-for-like sales excluding petrol rose 1.1% in the three months to May 30 - but, adjusting for this year's higher rate of VAT sales, crawled just 0.1% higher.
Sales stripping out petrol suffered because customers were paying around 30% more for fuel than a year ago and were shifting spending from other areas, the firm said.
Tesco also blamed comparisons with particularly high food inflation a year earlier and finance director Laurie McIlwee said the slump in sales growth was "fairly unique".
But the UK number one still expects UK like-for-like sales growth of around 3% for the full year as the group trades through the tough comparisons.
It also saw some signs of recovery despite some consumer concerns over the impact of next week's emergency Budget.
"Although customers in the UK continue to face some uncertainties about their personal finances going forward, we continue to see evidence of a steady consumer recovery," the firm said.
Chancellor George Osborne is said to be weighing up a potential hike in VAT next week to help tackle the deficit, but Mr McIlwee said the coalition had to take care in managing a fragile UK recovery.
He warned: "If there is an increase in VAT on products it should be in the future rather than now."
In the UK, Tesco benefited from its World Cup marketing campaign, with sales of some televisions more than doubling as customers traded up for the football tournament.
The firm's international business has also been helped with four of Tesco's overseas markets - South Korea, Slovakia, Japan and the USA - sending teams to the World Cup.
Tesco announced last week that its chief executive, Sir Terry Leahy, would quit next March after 14 years in charge at the retailer.
Sir Terry has led its overseas expansion although the firm added that international like-for-like sales growth had been "broadly flat" compared with the previous quarter, as political unrest in South Korea and Thailand unsettled trading.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...