By James Davey LONDON, April 10 (Reuters) - Tesco reports full-year results next Thursday, giving investors a steer on how Britain's biggest food retailer expects the Iran war to shape inflation
Tesco Reports to Address UK Grocery Inflation Amid Iran War Impact
Impact of Iran War on Tesco and UK Grocery Inflation
By James Davey
LONDON, April 10 (Reuters) - Tesco reports full-year results next Thursday, giving investors a steer on how Britain's biggest food retailer expects the Iran war to shape inflation pressures in grocery retail.
Immediate Effects on UK Households
The conflict's most immediate impact on UK household budgets has been felt at the petrol and diesel pumps, where a sharp rise in prices has pushed motoring costs higher.
Rising Costs for Farmers
Farmers, hit by soaring energy and fertiliser costs, have warned of higher prices from April, starting with tomatoes, cucumbers and peppers grown in heated greenhouses.
Expert Commentary
"We expect a delicate balance between delivering value to shoppers whilst managing the immediate cost pressures to be a key area of discussion," Clive Black, head of consumer research at Shore Capital, said of Tesco's update.
Food Inflation Outlook
FOOD INFLATION SET TO RISE
UK grocery inflation held at 4.3% in the four weeks to March 22, according to data from researcher Worldpanel. However, trade body the Food and Drink Federation has warned food prices will be rising by almost 10% by December.
Supply Chain Pressures
Pressure is already building in the supply chain. McBride, the manufacturer of private label cleaning products, said it was raising prices for its customers, which include supermarket groups, to cover the energy cost impact of the war on its suppliers.
Grocery supplier Princes has also signalled price increases.
Tesco's Financial Performance and Outlook
Tesco, whose shares are up 47% over the last year, has guided to adjusted operating profit of about 3.1 billion pounds ($4.2 billion) for the year to February 2026, broadly flat year-on-year, reflecting intensifying competition in the UK market.
For 2026/27, analysts are on average forecasting adjusted operating profit to grow to 3.23 billion pounds.
Analyst Expectations
Analysts expect Tesco to flag a tough first quarter trading comparative with 2025, when UK like-for-like sales rose 5.1%, helped by fine spring weather.
Non-Food Business Resilience
But they highlight that Tesco's non-food business accounts for less than 10% of group sales, leaving it relatively insulated from any war-related slowdown in discretionary spending.
($1 = 0.7459 pounds)
(Reporting by James Davey; Editing by Jan Harvey)
