Tough fuel prices and plummeting food inflation were blamed for a relatively poor performance from the UK’s number one supermarket.
Tesco said UK like-for-like sales excluding petrol rose 1.1 per cent in the three months to 30 May - but, adjusting for this year's higher rate of VAT sales, crawled just 0.1 per cent higher.
Tesco blamed like-for-like sales with remarkable high food inflation a year earlier and finance director Laurie McIlwee said the slump in sales growth was "fairly unique".
The retailer said consumers were allocating budget from elsewhere to cope with an increase in fuel prices around 30 per cent.
But Tesco also saw some signs of recovery despite some consumer concerns over the impact of next week's emergency Budget.
Current chief executive Terry Leahy said: "Tesco has made a solid start to the new financial year. We're making good progress with our strategy: investing in the shopping trip for customers; driving strong productivity gains; growing space and winning market share.
“The long-term global recovery is well underway although the pace and strength of economic recovery varies across our markets. We're in good shape and well-positioned to deliver further growth as the economic environment continues to improve."
Chancellor George Osborne is said to be weighing up a potential hike in VAT next week to help tackle the deficit, but McIlwee said the coalition had to take care in managing a fragile UK recovery.
No comments yet