Tesco to reveal latest customer spending amid inflation pressure

Supermarket giant Tesco is set to shed more light on how customer spending is holding up as shoppers deal with rapidly increasing food inflation.

The UK’s biggest grocer will reveal how trading has performed over the three months to May when it updates shareholders on Friday June 17.

Tesco has been resilient despite pressure on shoppers as early figures from research firms, such as Kantar, have showed that the chain has grown market share against its “Big Four” rivals, Sainsbury’s, Asda and Morrisons, in recent months.

Nevertheless, it has still seen its shares dip in recent weeks and traders have become worried that consumers are restricting their regular spending amid a surge in household bills.

The Office for National Statistics (ONS) said on Friday that 41% of households surveyed over the past fortnight are spending less on food shopping and essentials.

Investors will be keen to hear from Tesco bosses about whether these patterns are the same among their customers and if this could have an impact on short-term profitability.

“Shopper confidence fell sharply through the start of April and the energy price cap hike suggests wallets have felt the pinch since then,” said Matt Britzman, equity analyst at Hargreaves Lansdown.

“Commentary on the outlook from management will be a key indicator to how this is playing out.

“Tesco’s commitment to focusing on pricing should hold it in good stead if consumers shift down the value chain but that comes at a cost.”

Customer price perceptions of the chain has remained strong and Tesco has benefited from its recent Aldi price match campaign in an effort to ensure its shoppers do not switch to cheaper German discounter rivals.

Analysts at Jefferies have predicted that Tesco will reveal a 1.4% decline in like-for-like sales, excluding fuel, over the quarter, compared with a lockdown-boosted performance from last year.

The rebound of hospitality, which has impacted sales at most grocery retailers, could also aid Tesco through its Booker wholesale arm, which is likely to report strong growth through its foodservice business.

It comes after Tesco said in April that total retail operating profits are set to fall by up to 9% in the year to next February as it continues to tackle inflating costs.