Tesco sales growth hits seven-year high as CEO insists it will try to keep prices low

Price rises are a “last resort”, according to Tesco CEO Dave Lewis, who has led the supermarket giant to a sixth consecutive quarter of sales growth.

Tesco reported a 2.3% rise in UK like-for-like sales for the 13 weeks to 27 May – its strongest performance since 2010 and sixth consecutive quarter of growth. It also means it beat analyst forecasts of 1.9% growth.

The big four supermarket has benefited from convincing shoppers to return from its rivals, with its first-quarter performance boosted by a 2.7% rise in food sales. And these numbers have particularly resonated with shareholders, with Tesco’s shares up 3% this morning – making it the biggest riser in the FTSE 100.

Tesco is growing amid a period of inflation in the UK, which is putting the pressure on everyday household budgets. In May, for example, inflation hit a four year-high of 2.9%. Tesco CEO Dave Lewis insists he will do everything to try to keep prices low.

Lewis also says “confidence” has returned to Tesco and its plans to create “long-term, sustainable” value for its key shareholders are on track.

“In tough market conditions, we have stayed true to our commitment to helping customers – working closely with our supplier partners to keep prices low – any price rises are a last resort,” he explains.

“Customers have responded by doing more of their shopping with us and as a result we continue to grow volumes, particularly in fresh food.”

However, Tesco will have a battle on its hands to keep prices low. Last year, Tesco removed Marmite from its website following a standoff with Unilever due to the FMCG giant attempting to raise prices on its staple food and drink ranges by up to 10%. And with the value of the pound continuing to stumble due to uncertainty around the Brexit negotiations, it wouldn’t be a surprise if more major suppliers attempted to raise the prices of branded goods over the coming months.

Tesco isn’t the only big four supermarket riding high at the moment, with all of the big four supermarkets growing market share over the 12 weeks ending 21 May, according to Kantar Worldpanel. Morrisons was the standout performer clocking up 1.9 percentage points of growth, with even struggler Asda recording a rise of 0.9 percentage points due to its strong value own-label ranges.