Ken Murphy, the chief executive of supermarket chain Tesco, has warned that inflation may yet increase further in 2023.

The UK’s consumer price inflation rate reached a 41-year high of 11.1 per cent in October, dropping to 10.7 per cent in November. While the Bank of England has estimated that this will slow to around 5 per cent by late 2023, the Tesco boss thinks that the worst may still be ahead.

Speaking after the company claimed it was the only major supermarket to grow its market share versus pre-pandemic levels over the festive period, Murphy responded to a question on inflation by saying: "We're not sure it's peaked just yet. We would hope that by the middle of the year it will have peaked and then we will see it come down the other side."

Tesco reported like-for-like sales of 4.3 per cent in the third quarter of 2022, with it achieving a 7.2 per cent increase in the six weeks to January 7. It attributed this growth to larger family gatherings after two years of pandemic curbs, while rail strikes which crippled hospitality revenues in late 2022 also benefited supermarkets more broadly.

Murphy said that the company will focus on aggressive pricing, and that the chain will absorb some of its cost inflation rather than passing it on to consumers – something that Sainsbury's has also publicly said it will do.

The CEO said: "We are more focused this January on value because we think that's what's important to customers. That said, the performance is pretty good and in line with our expectations.”

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