Tesco CEO Pushes Back on Proposed Price Caps, Denies Profiteering

Tesco CEO Ken Murphy has cautioned against the imposition of price caps on essential groceries, stating that such measures are neither "necessary nor desirable." Speaking as the UK's largest supermarket reported a 1.8% rise in UK sales for the three months ending in May, Murphy asserted that the highly competitive nature of the grocery market effectively regulates prices.

"We operate in a highly competitive market. This industry is very good at self-regulating from a price perspective," Murphy told reporters. His comments come amid concerns that a potential shift in political policy could lead to populist anti-business measures.

The idea of voluntary price caps on basic items like milk, bread, and butter had reportedly been raised by government officials with supermarket chains, though the proposal was quickly met with criticism and backtracking. Marks and Spencer CEO Stuart Machin had previously dismissed the plans as "completely preposterous."

Tesco's UK sales growth of 1.8% fell short of analyst expectations, leading to a slight dip in its share price. However, the company maintained its full-year profit guidance. Murphy attributed the slowdown in sales growth primarily to unfavorable weather in early 2026, rather than solely to consumer concerns stemming from the conflict in the Middle East.

Murphy also addressed accusations that supermarkets had profited from rising fuel costs, particularly in light of the Iran war. He stated that prices at Tesco's petrol pumps were decreasing and pushed back against any suggestion of profiteering. "I’m not concerned about any risk of people thinking we are profiteering," he said.

Regarding food inflation, Murphy indicated that fears of significant price jumps, comparable to those seen after Russia's invasion of Ukraine in 2022, had not materialized. "We don’t see anything like that and we continue to stick to that view," he said, noting that the Middle East region is not a major food producer, unlike Ukraine, and that suppliers had learned lessons from previous supply chain disruptions by hedging against energy price volatility. He added that the recent dip in global oil prices following a peace deal would be passed on to consumers.

Tesco has continued to increase its market share, now standing at just over 28%, its highest level in over a decade. The company's sales figures were revealed alongside Murphy's remarks on pricing policy and market conditions.