Preview: Britain's Tesco to shine light on inflation risks from Iran war

Tesco

10/04/2026 07:00

Tesco publishes full-year 2025/26 results on April 16

Has guided to flat 2025/26 adjusted operating profit

UK grocery inflation forecast to rise

Analysts expect profit growth in 2026/27

By James Davey

LONDON, April 10 (Reuters) - Tesco TSCO.L reports full-year results next Thursday, giving investors a steer on how Britain's biggest food retailer expects the Iran war to shape inflation pressures in grocery retail.

The conflict's most immediate impact on UK household budgets has been felt at the petrol and diesel pumps, where a sharp rise in prices has pushed motoring costs higher.

Farmers, hit by soaring energy and fertiliser costs, have warned of higher prices from April, starting with tomatoes, cucumbers and peppers grown in heated greenhouses.

"We expect a delicate balance between delivering value to shoppers whilst managing the immediate cost pressures to be a key area of discussion," Clive Black, head of consumer research at Shore Capital, said of Tesco's update.

FOOD INFLATION SET TO RISE

UK grocery inflation held at 4.3% in the four weeks to March 22, according to data from researcher Worldpanel. However, trade body the Food and Drink Federation has warned food prices will be rising by almost 10% by December.

Pressure is already building in the supply chain. McBride MCB.L, the manufacturer of private label cleaning products, said it was raising prices for its customers, which include supermarket groups, to cover the energy cost impact of the war on its suppliers.

Grocery supplier Princes PRN.L has also signalled price increases.

Tesco, whose shares are up 47% over the last year, has guided to adjusted operating profit of about 3.1 billion pounds ($4.2 billion) for the year to February 2026, broadly flat year-on-year, reflecting intensifying competition in the UK market.

For 2026/27, analysts are on average forecasting adjusted operating profit to grow to 3.23 billion pounds.

Analysts expect Tesco to flag a tough first quarter trading comparative with 2025, when UK like-for-like sales rose 5.1%, helped by fine spring weather.

But they highlight that Tesco's non-food business accounts for less than 10% of group sales, leaving it relatively insulated from any war-related slowdown in discretionary spending.

($1 = 0.7459 pounds)

FOCUS-Britain's Tesco turns rapid-delivery threat into competitive edge nL8N3Z21OE

UK grocery inflation sticks at 4.3% in March, says Worldpanel nL8N407154

UK food inflation heading towards 10% due to Iran war, industry says nL8N40K0K3

ANALYSIS-UK economy shows first hits from Iran war, putting policymakers to the test nL8N40C1LD

 (Reporting by James Davey; Editing by Jan Harvey)

 ((james.davey@thomsonreuters.com))