Tesco cools down its price rises as inflation bites shoppers

 
Helen Cahill
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The supermarket (Source: Getty)

Tesco cooled its price rises last month, according to new data, as it seeks to become more price-competitive than its peers.

In August, price inflation fell to 1.4 per cent, down from 4.1 per cent in July, according to data from UBS.

"If Tesco was trying to rebuild margin then the initiative was short-lived," said Daniel Ekstein, food analyst at UBS. "August saw resumption of the trend for Tesco being significantly less inflationary than its Big Four peers."

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Averaged over the last three months, inflation at Tesco was 2.4 per cent, below UBS' average for the sector of 2.9 per cent.

The UK's overall rate of inflation jumped to 2.9 per cent in August, up from 2.6 per cent in July.

The rising cost of everyday goods has been helping supermarket sales, but consumer spending growth is slowing.

According to figures from the British Retail Consortium, like-for-like food sales grew 1.8 per cent in August, which the trade body said was largely due to inflation. Meanwhile, overall consumer spending growth is slowing, and is on track for its worst year since 2013, according to data from Visa released this week.

The discount retailers have been benefiting from the trend. With shoppers focusing more on price, fashion chain Primark said its UK sales would receive a 10 per cent boost this year. Meanwhile, Lidl has leapfrogged Waitrose to become the seventh-largest supermarket in the country.

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