Tesco, Britain’s biggest retailer, said today it had made good progress, despite powerful economic headwinds that sparked its “Britain’s Biggest Discounter” campaign, slashing prices on hundreds of items and launching 350 new products.

The supermarket giant announced this morning that like-for-like sales, excluding petrol, at its British operation rose 4 per cent over the summer months, despite consumers' budgets being hit by rising food costs and energy prices.

Tesco, which serves more than 20 million British shoppers a week, said profit before tax and one-off items was up 10.3 per cent in the six months to August 23 at £1.453 billion on a 13.8 per cent rise in total sales to £25.6 billion. The figures matched analysts' expectations.

This was despite the performance of US offshoot Fresh & Easy, which cost the group around £60 million, and emerging evidence of consumers trading down in some products to help relieve stretched household budgets.

Tesco said the average weekly grocery bill for a family of four rose by 25 per cent to £127 in a year, but expects inflation to slowly subside through the second half of this year.

Terry Leahy, chief executive of Tesco, said: “Tesco is at its best in tough markets — responding to the changing needs of customers — and that’s why we have been able to make good progress this year, despite facing into powerful economic headwinds and carrying planned start-up losses in the US."

The company plans to continue its property divestment strategy, which has raised £605 million this year.

Full story to follow soon.

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