SHARE OF THE WEEK: Tesco to give insight into outlook for food prices

Tesco will next week update investors on trading – and give a crucial insight into the outlook for food prices.

While the City will have an eye on how the supermarket giant is faring financially, there will be much interest into whether there is any respite on the way for hard-pressed shoppers. 

There have been signs that UK grocery inflation is letting up, but it still remained near record highs at 17.2 per cent in the four weeks to May 14.

Soaring food prices pose a problem for supermarkets which have faced accusations of profiteering.

Yet in such a competitive market, and with Aldi and Lidl on the charge, pressure is on the traditional grocers to keep prices as low as possible for fear of scaring off customers.

Ahead of Tesco’s first-quarter trading update on Friday, Matt Britzman, equity analyst for Hargreaves Lansdown, said: ‘Tesco’s focus on prices, with key promotions like low everyday prices and Aldi price match, have helped it to retain market share over the past few years.

‘That comes at a cost, and the accelerated cost-saving programme is expected to move at some pace to help offset higher marketing spend and cost inflation.’

The supermarket has hit back at claims that it is profiteering, having raked in profits of £2.6billion in the 12 months to the end of February.

Shareholders will be keen to see if the group says anything about how its margins are faring against a backdrop of higher supply chain costs.