Tesco has reported “encouraging early signs” that grocery inflation is starting to ease while revealing a leap in sales.

The UK’s largest retailer said there was a slowdown in price growth across the market and it was continuing to focus on value for its customers.

The company updated on its performance as the food sector faces regulatory scrutiny on its pricing.

It is not obliged to give profit figures in its first quarter update but said UK like-for-like sales, excluding fuel, rose 9% to £10.8bn in the 13 weeks to 27 May.

Tesco reiterated its existing guidance for profitability over the full year, meaning there was no upgrade despite the strong sales growth.

The company said that data showed it had “led the market in cutting prices on essential items to support customers”.

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Just a week ago, Tesco was accused by a consumer group of a lack of transparency over its Clubcard discounts.

That followed an announcement by the Competition and Markets Authority (CMA) last month that it was examining the wider grocery and fuel industry for any failure of competition that could mean consumers are being overcharged.

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Food inflation has proved among the most stubborn elements of the cost of living crisis in recent months, with the rate continuing to run above 19%.

While the bitter rivalry between chains, including the discounters, and diversity of choice has long been credited for healthy competition in the grocery sector, there are concerns they have been too slow to pass on wholesale price cuts.

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On the fuel issue, pump prices have fallen sharply since large disparities between delivery and pump costs were flagged.

The government has warned it is examining the potential for food price caps amid frustration that grocery costs have been slow to follow suit.

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The sector argues that punitive costs remain, especially in the supply chain, with energy and labour among the factors weighing heavily across the board.

Ken Murphy, Tesco’s chief executive, said of the company’s performance: “Customers continue to recognise our leading combination of great value and quality in every part of their basket – from essentials covered by our Aldi Price Match, through to our growing Finest range.

“We are very conscious that many of our customers continue to face significant cost of living pressures and we have led the way in cutting prices on everyday essential items.

“There are encouraging early signs that inflation is starting to ease across the market and we will keep working tirelessly to ensure customers receive the best possible value at Tesco.”

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