The boss of Tesco said the supermarket chain is “doing everything we can to drive down food bills” as it improved its profit guidance on the back of “strong” sales.
Ken Murphy, chief executive of the retailer, said it benefited from investment in pricing and customers switching “from premium retailers” as they continue to assess their shopping budgets.
The company, which is the UK’s largest private employer, also signalled that food inflation would fall further after a slowdown during the past half-year.
It revealed it has cut prices on around 2,500 products, with an average fall of 12%.
Tesco Half Year Results 23/24: Winning with customers by investing in value and quality.
— Tesco News (@tesconews) October 4, 2023
The price of bread, broccoli, pasta, oils and cheeses are among those to have fallen in recent months, according to the grocery firm.
Mr Murphy however added that there are “a few areas where we are still seeing continued inflation”, such as chicken and potatoes.
Tesco told shareholders that group sales, excluding VAT and fuel, grew by 8.9% to £30.75 billion for the six months to August, compared with the same period last year.
Meanwhile, adjusted operating profit grew by 14% to £1.48 billion across the group for the half-year.
It said on Wednesday that it now expects retail adjusted operating profit, its preferred metric, to be between £2.6 billion and £2.7 billion for the year.
The firm had previously guided that it would be broadly flat, at around £2.5 billion.
Mr Murphy said: “We are committed to doing everything we can to drive down food bills and Tesco is now consistently the cheapest full-line grocer.
“This relentless focus on customers, combined with significant cost reductions from our ‘save to invest’ programme, has driven our strong performance in the first half of the year.
“Food inflation fell across the half, and while external pressures remain we expect that it will continue to do so in the second half of the year.
“We are in a strong position to keep investing for customers, and will continue to lower prices wherever we can – doing everything in our power to make sure customers can have a fantastic, affordable Christmas by shopping at Tesco.”
Richard Lim, chief executive at Retail Economics, said: “These results are mightily impressive.
“Their relentless focus on value has delivered strong growth while the significant bounceback in profitability will be a cause of attention.
“Many shoppers are prioritising cost above everything else, trading down to cheaper alternatives and searching out the best bargains.”
Shares in Tesco were 2.8% higher in early trading.