Tesco boss downplays double-digit food inflation warning over Iran war
The boss of Tesco said he doesn’t “recognise” warnings that food inflation could soar to double digits this year due to supply chain chaos caused by the Iran war.
Ken Murphy, chief executive of the supermarket giant, said he currently has no concerns over significant price inflation and “doesn’t know” whether this is coming down the track.
Speaking on a media call shortly after publishing annual results from the UK’s biggest retailer, Murphy defied the worst extent of wider industry gloom over looming price rises.
He referred to a warning from the Food and Drink Federation (FDF) earlier this month that food inflation will more than triple to nine per cent this year and could exceed 10 per cent if the Iran war persists for more than a few weeks.
Murphy said: “We are not seeing any meaningful inflation coming through, with the obvious exception of the cost prices we’ve seen on fuel.
“We don’t recognise the number that was published. We don’t know what it’s going to look like because, clearly, this is a very volatile, unpredictable situation.
“But what I can tell you is that we will be doing everything in our power to minimise the impact on customers,” he added.
Murphy called on the government to help supermarkets keep prices down, echoing recent calls from his counterparts at Marks & Spencer and Asda.
“In terms of tax pressures, industry and energy in particular, anything the government can do to help us keep prices low for customers is welcome,” he said.
With maritime energy exports blocked from the Strait of Hormuz, through which a fifth of global oil supplies flow, fears have risen that knock-on disruption to global supply chains could even plunge the UK into food shortages.
The government is reportedly drawing up contingency plans for a “reasonable worst-case scenario” which could see supermarket shelves empty of chicken, pork, and other key goods.
Murphy downplayed food shortage fears on Thursday but said the government is “doing the right thing” by making contingencies.
‘Weather hit supply chains more than Iran war’
He said Tesco has faced bigger supply chain disruptions due to weather than due to the Iran war this year.
“Interestingly enough, the biggest challenges we’ve had on supply chain have had nothing to do with the conflict so far, but more to do with weather,” he stated.
Murphy said storms in North Africa, Morocco, southern Spain and Portugal have caused the biggest supply chain issues for Tesco so far this year.
The Tesco boss said supply chain blockages reportedly caused by the Middle East conflict are yet to materialise: “We have no issues in our supply chain at this point and, so far, no flagged concerns from any of our suppliers or growers.”
As well as supply chain blockages, the Iran war has also spiked fuel costs, prompting rival supermarkets Marks and Spencer (M&S) and Asda to call on the government to cut energy costs.
Murphy said he would support any action by the Treasury to lighten the tax burden on grocers.
“Anything the government can do to help us to keep prices low for customers is welcome. So we would never say no to any help on things that could allow us to keep prices down,” he added.
Profit jumps despite Iran war fears
Tesco’s share price jumped by more than three per cent on Thursday, to 486p, following the supermarket’s preliminary full-year results.
The supermarket giant made an operating profit of over £3.1bn in the year to February 2026, overperforming its own forecasts of between £2.9 and £3.1bn.
The FTSE 100 firm turned a pre-tax profit of £2.4bn, up more than eight per cent from last year, as revenue grew by 5.4 per cent to £74bn.
The grocer expects to make an even bigger profit next year, forecasting an operating profit of between £3 and £3.3bn, but is allowing for a wider range to insulate itself against potential disruption.
The firm said in its results: “Much will depend upon the duration of the conflict and in particular, the potential implications for UK households and the economy more broadly.”