Profits at Tesco have slipped following the rise in inflation and lower demand from customers following the end of Covid lockdowns.

The retailer said that pre-tax profits fell to £431 million in the first half of the financial year, a drop of almost 64 per cent compared to the same period of 2021. Tesco expects full year profit to fall in the lower range of its forecast between £2.4 and £2.5 billion.

Sales over the past six months rose around six per cent to £32.5 billion.

The food retailer added that it has introduced a number of promotions to help customers with the cost-of-living crisis including Aldi price match, low everyday prices and clubcard prices. It said that these initiatives have helped it stay competitive during rising inflation.

Commenting on the figures, chief executive Ken Murphy said that customers are “watching every penny to make ends meet”, adding that it is too early to predict how customers are going to adapt to changes and uncertainties in the market.

“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,” said the chief exec. “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.”

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