Tesco CEO Dismisses Double-Digit Food Inflation Fears Amid Iran War Concerns
Thursday 16 April 2026 9:05 am
By: Felix Armstrong, Retail Reporter
Tesco chief executive Ken Murphy has publicly rejected alarming industry predictions that food inflation could surge to double digits this year due to supply chain disruptions caused by the ongoing Iran war. Speaking on a media call following the release of Tesco's annual results, Murphy stated he does not "recognise" these warnings and expressed confidence in the supermarket's current supply chain stability.
Murphy Challenges Industry Gloom Over Price Rises
Ken Murphy directly addressed recent warnings from the Food and Drink Federation (FDF), which projected that food inflation could more than triple to nine percent this year and potentially exceed ten percent if the Iran conflict persists beyond a few weeks. "We are not seeing any meaningful inflation coming through, with the obvious exception of the cost prices we've seen on fuel," Murphy declared. He emphasized the volatile nature of the situation, adding, "We don't know what it's going to look like because, clearly, this is a very volatile, unpredictable situation."
The Tesco boss committed to minimizing impacts on customers, stating, "What I can tell you is that we will be doing everything in our power to minimise the impact on customers." This stance comes amid broader fears that maritime energy exports blocked from the Strait of Hormuz—through which twenty percent of global oil supplies flow—could trigger knock-on disruptions to global supply chains, potentially leading to food shortages in the UK.
Weather Poses Bigger Challenge Than Conflict
Murphy downplayed concerns about food shortages, noting that the government is "doing the right thing" by preparing contingency plans for a worst-case scenario that could empty supermarket shelves of chicken, pork, and other essential goods. He revealed that Tesco has faced more significant supply chain disruptions from weather events than from 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 explained.
Specifically, Murphy cited storms in North Africa, Morocco, southern Spain, and Portugal as the primary causes of supply chain issues for Tesco in 2026. He assured that supply chain blockages reportedly linked to the Middle East conflict have not materialized for the retailer: "We have no issues in our supply chain at this point and, so far, no flagged concerns from any of our suppliers or growers."
Fuel Costs and Government Support
The Iran war has driven up fuel costs, prompting rival supermarkets Marks and Spencer and Asda to urge the government to reduce energy expenses. Murphy expressed support for any Treasury actions to alleviate the tax burden on grocers, stating, "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."
Strong Financial Performance Despite Uncertainty
Tesco's share price rose by over three percent to 486p on Thursday following the release of its preliminary full-year results. The supermarket giant reported an operating profit exceeding £3.1 billion for the year ending February 2026, surpassing its own forecasts of £2.9 to £3.1 billion. As a FTSE 100 company, Tesco achieved a pre-tax profit of £2.4 billion, an increase of more than eight percent from the previous year, with revenue growing by 5.4 percent to £74 billion.
The grocer anticipates even higher profits next year, forecasting an operating profit between £3 and £3.3 billion, while allowing for a wider range to buffer against potential disruptions. In its results statement, Tesco acknowledged the uncertainty: "Much will depend upon the duration of the conflict and in particular, the potential implications for UK households and the economy more broadly."
