LONDON: Britain’s largest retailer Tesco on Wednesday announced tumbling profits in its first half as higher costs fuelled by rocketing inflation offset a jump in revenue.

Profit after tax slumped to £253 million ($290 million) in the six months to late August from £781 million a year earlier, the supermarket giant said in a statement.

The group noted “cost inflation is significant” and said full-year profits would be towards the lower end of its previous expectation.

“We know our customers are facing a tough time and watching every penny to make ends meet”, Tesco chief executive Ken Murphy said in the statement, adding that UK staff would be getting a second pay rise this year.

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“Customers are seeking out the quality and value of our own brand ranges as they work to make their money go further, whether they are switching from branded products, between categories or cutting back on eating out.”

Tesco added that total sales grew 6.7 percent to £32.5 billion in its first half.

Revenue from sales of fuel soared 39 percent to almost £4.3 billion.