Tesco boss warns on inflation impact for customers

• Tesco sees revenue fall 1.5 percent to £9.9 billion ($12.2 billion) in the 13 weeks leading up to the end of May
• CEO cites rising inflation as a reason for customers spending less on branded foods. UK inflation at 9 percent.
• The highest level in 40 years, and set to top 11 percent in coming months.

Tesco disclosed a decline in income at its UK stores on Friday, citing rising inflation as a reason for customers spending less on higher-priced branded foods.

In the 13 weeks leading up to the end of May, revenue fell 1.5 percent to roughly £9.9 billion ($12.2 billion), according to the UK’s largest retailer.

“We’re seeing some early indicators of shifting customer behavior as a result of the inflationary climate,” Tesco CEO Ken Murphy said.

“Customers are facing unprecedented increases in the cost of living and it is therefore even more important that we work with our supplier partners to mitigate as much inflation as possible,” he added.

Read More: UK food price inflation of 15% is coming

UK inflation stands at nine percent, the highest level in 40 years, and is set to top 11 percent in the coming months, according to the Bank of England.

Ahead for Tesco, “rising fuel prices are likely to increase the costs of maintaining its delivery and logistics operations”, noted Michael Hewson, chief market analyst at CMC Markets UK.

“Higher staff costs will also act as a brake with the supermarket pledging to increase staff wages in its efforts to retain service levels.”

With inflation soaring, the BoE on Thursday hiked its main interest rate for the fifth straight time.

Policymakers agreed at a regular meeting to increase the cost of borrowing by a quarter-point to 1.25 percent, the highest level since the global financial crisis in 2009.

Read More: Europe’s central banks hike interest rates to fight inflation surge

Prices are surging over the world as economies emerge from epidemic lockdowns and the Ukraine crisis pushes already high energy costs even higher.

As a result, central banks throughout the world are raising interest rates, despite economists’ warnings that this could push major economies into recession.