Tesco PLC (LSE:TSCO) has once again found itself defending itself against claims of 'greedflation' after the supermarket announced a 9% rise in sales to £10.80bn in the first quarter.
“We react pretty quickly when we see […] commodities come down,” chief executive Ken Muphy told reporters following the update.
He also agreed it was unfair that Tesco and its rivals were blamed for high inflation by clinging to higher prices in stores.
Tesco and J Sainsbury PLC (LSE:SBRY) have previously been accused of profiteering on the back of higher inflation, with Bank of England governor Andrew Baily commenting that food prices were taking longer to fall than expected earlier this week.
"We've been told for some time [food prices] have reached their peak, he told members of the House of Lords on Tuesday, “then the contacts come back and say 'sorry, we got that one wrong.'"
Wheat prices have fallen back to mid-2021 levels before the war in Ukraine led to hiked commodity and energy prices.
Murphy argued that commodities were not the only determinant of food prices though, claiming higher energy prices were continuing to bite, alongside labour shortages in the UK.
AJ Bell analyst Russ Mould noted that Tesco’s first-quarter sales growth had mainly been driven by inflation, which sat at 8.7% in May.
“Perhaps supermarkets have been a bit sluggish in passing on falling wholesale costs,” he said, adding Tesco would have avoided raising profit guidance because sales volumes were not growing.