Tesco records fastest sales growth in three years

Kantar Worldpanel figures show food prices are 0.5% lower than 2015 but are expected to rise from December.

Sales at Tesco grew at their fastest pace in three years in the 12 weeks to 6 November, figures released on Tuesday (15 November 2016) by Kantar Worldpanel showed. According to data from the industry research group, the retailer posted a 2.2% year-on-year increase in sales in the period, providing further proof that the turnaround plan implemented by chief executive David Lewis is paying dividends.

The figures mark another month of improvement for Britain's largest supermarket, which in October had recorded sales growth for the first time since March 2015.

Kantar added that in the period to early November, the FTSE 100-listed company outperformed the grocery sector, which saw sales grow 0.8% year-on-year as a whole over 12 weeks.

Discount chains Aldi and Lidl continued to perform better than their competitors, with sales growing 10.2% and 6.1% respectively, although Kantar added the rate of growth was the slowest on record for both groups since 2011.

Iceland's display was also impressive, with sales at the supermarket 8.3% higher than in the corresponding period in 2015, while Waitrose and the Co-Operative reported growth of 3% and 2.2% respectively.

However, Asda, Morrisons and Sainsbury's saw sales fall for the second consecutive month, with the former recording a 5% drop, while sales at the latter two declined by 2.4% and 0.7% respectively.

Despite the pound's sharp depreciation following the Brexit vote and growing concerns over rising inflation, the report showed food prices were 0.5% lower than in the same period a year ago. However, Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, warned that prices would, in all likelihood, begin to rise next month, unless retailers opted to keep them deliberately low to encourage shoppers to spend during the Christmas period.

"Although it's tempting to link any potential price increases to Brexit and the devaluation of sterling, it's worth remembering that deflation has been easing since December last year, well before the referendum," he said.