LONDON: Tesco, Britain’s biggest retailer, said it was seeing early indications of changing customer behaviour due to surging inflationary pressures that had made the market environment “incredibly challenging”.

The group, which has outperformed its peers, said it maintained its full-year profit guidance despite reporting a fall in UK sales in its latest quarter.

“Although difficult to separate from the significant impact of lapping last year’s lockdowns, we are seeing some early indications of changing customer behaviour as a result of the inflationary environment,” said CEO Ken Murphy.

He noted that shoppers were facing unprecedented increases in the cost of living, making it even more important that Tesco works with suppliers to mitigate as much inflation as possible.

Tesco, which has an over 27% share of Britain’s grocery market, said UK like-for-like sales, excluding VAT sales tax and fuel, fell 1.5% in the 13 weeks to May 28, its fiscal first quarter, broadly in line with analysts’ forecasts.

They had fallen 1.2% in the previous quarter.

Sales in the same quarter last year had been boosted by a third pandemic lockdown.

US retail sales post first decline in five months as inflation bites

Tesco kept its profit guidance for the full year - retail adjusted operating profit of between 2.4 billion pounds and 2.6 billion pounds ($2.95-$3.20 billion), down from 2.65 billion pounds made in 2021-22.