Tesco cuts bread prices to beat Aldi and Lidl

Mr. Murphy says Tesco «removed price as a reason for shoppers to shop elsewhere.» Credit: Parsons Media/Reuters

Tesco signaled it was ready to cut bread prices as the UK's largest supermarket seeks to compete with rivals Aldi and Lidl.

The supermarket, which cut milk prices earlier this week to below German discounters have said that the cost of ingredients, including grains and oil, has begun to decline, meaning further price cuts may be on the horizon.

Ken Murphy, chief executive of Tesco, said: «We hope that in some areas, in the bakery, you will start to see some deflation.» He added that the retailer will be «very vigilant and very strict» to get the best price from its suppliers when it sees their costs coming down.

The prospect of lower bakery prices comes after months of growth in the department , and Mr. Murphy said the bakery was one of the areas that experienced «the heaviest inflation». This was caused by a jump in the price of flour and gas after the Russian invasion of Ukraine.

At Warburton's, for example, the price of a loaf of white bread rose 16% in January at Asda and Morrisons, according to Assosia data published in The Grocer. Baker's chairman Jonathan Warburton told The Telegraph earlier this year that the rise in costs has been «mind blowing». «The market was fierce,» he added.

Morrisons also cut back on the number of different packages of goodies it sold in an attempt to avoid some of the extra costs.

Tesco's latest comments come a day after the company said it was ramping up its price-cutting efforts. , lowering the price of a pint of milk below Aldi and Lidl. Sainsbury's announced on Thursday that it is matching Tesco's prices.

Mr Murphy said Tesco has «removed price as a reason for shoppers to shop elsewhere» in recent months and has become «the most competitive «. 39;ve ever been» as it fixed the prices of over 1,000 products until July.

Such moves to keep prices down amid sky-high inflation saw the grocer's pre-tax profits halved, in accordance with the law, to £1bn in the final financial year until the end of February.

In the operating room Based on Tesco's earnings fell more than 6% for the year. The sharper decline in charter figures was caused by a write-off, mainly of the value of Tesco's assets, which it blamed on macroeconomic factors. The company also suffered from higher restructuring costs following the change in management.

Mr. Murphy said: «Customers don't have to worry about paying more when they shop with us.»

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Traditional stores struggle to keep customers coming through doors as more people hunt for bargains. According to Kantar, £62.8 million was transferred from Tesco to Aldi in the 12 weeks to the end of March. That's more than any other supermarket.

Tesco is Britain's largest supermarket. a supermarket with a 27% share of the total market, followed by Sainsbury's with a 15% market share.

Mr Murphy said conditions are «favoring [discounters] right now» as pressure on cost of living affects on the household budget, and German supermarkets are opening in new cities. Both Aldi and Lidl are up more than 25% year-on-year, compared to about 5% growth for Tesco.

Tesco said efforts to keep prices low mean she expects earnings to be broadly flat this year. financial year by the end of February.