Tesco profits rose by almost 160pc last year as Britain’s biggest supermarket said inflationary pressures have “lessened substantially”.
The retail giant posted profits before tax of £2.3bn for the year to February, compared to £882m for the previous 12 months.
Bosses said Tesco had benefitted from price rises falling “gradually across the year”, in the latest sign that inflation across the broader economy is turning a corner.
Figures from Kantar late last month revealed that grocery inflation had fallen to its lowest level in two years, raising hopes that the Bank of England will cut interest rates in the coming months.
Tesco chief executive Ken Murphy said: “Inflationary pressures have lessened substantially, however we are conscious that things are still difficult for many customers, so we have worked hard to reduce prices and have now been the cheapest full-line grocer for well over a year.”
Tesco’s jump in profits was also fuelled by shoppers buying more in its stores, as it said that retail sales were up 6.8pc on a like-for-like basis, with revenues rising 4.4pc to £68.2bn.
Mr Murphy said: “Customers are choosing to shop more at Tesco, which is reflected in growing market share as they respond to the improvements we’ve made to the value and quality of our products.”
The latest Kantar figures suggested Tesco’s market share surpassed 27pc last month, extending its lead over its nearest rival Sainsbury’s.
Demand has been boosted by the growing uptake of its loyalty card scheme Tesco Clubcard.
The grocer said the number of households with a Clubcard hit 22m last year, representing a yearly rise of 6pc.
Tesco said the “strong momentum” in its business and “signs of improving consumer sentiment” meant it was now expecting profits to grow further this year.
It is forecasting retail adjusted operating profits of at least £2.8bn for the next financial year and a £80m boost from its Tesco Bank business.
For the latest year, its retail adjusted operating earnings came in at £2.76bn, with Tesco Bank posting profits of £69m.
Mr Murphy said: “We’re excited about the opportunities ahead, with the right plans to keep winning with customers, as well as a great team to deliver them.”
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