A representative of Tesco said on April 16 that uncertainty surrounding the economic impact of a war with Iran is weighing on the company’s outlook, with a worst-case scenario potentially

leading to a decline in profits this year.

Tesco, which holds a 28% share of the UK grocery market, forecasts adjusted operating profit between £3.0 billion and £3.3 billion for the financial year ending February 2027. This compares with £3.152 billion reported for 2025/26, a 0.6% increase year-on-year that slightly exceeded expectations.

“Much will depend on the duration of the conflict and, in particular, its potential consequences for UK households and the broader economy,” Tesco said in a statement.

Analyst William Woods of Bernstein noted that Tesco is issuing “cautious and conservative guidance amid the war in the Middle East to avoid accusations of speculation.”

Rising fuel prices driven by the conflict have already put pressure on British consumers, reducing household spending as travel plans were postponed, according to survey data released on April 14.

Food price inflation in the UK remained at 4.3% in the four weeks leading up to March 22, according to research firm Worldpanel.

Tesco CEO Ken Murphy told journalists that the company has not yet observed significant food price inflation linked to the conflict and disagrees with warnings from the Food and Drink Federation that prices could rise by nearly 10% by December.

Murphy added that Tesco has not seen any meaningful changes in consumer behavior so far. Photo by Stephen Craven, Wikimedia commons.