By Anna Wise

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The boss of Tesco has made a plea to the Government to not “make it harder” for the grocery sector to keep prices low for customers ahead of the autumn Budget, despite revealing profits could surpass £3 billion this year.

Households budgets remain squeezed and shoppers are increasingly seeking out value, according to the UK’s biggest supermarket.

Ken Murphy, Tesco’s chief executive, said he was hoping the autumn Budget would not put additional pressure on grocers that are already facing much steeper business costs.

“What we’d love to see is a Budget that’s pro-growth and pro-jobs which, as a result, will help customers with the cost of living,” Mr Murphy said.

“We know that people are worried about what lies ahead and we’re seeing that in the consumer sentiment.

“As a food retailer, we operate in a very competitive and very tough environment, and I think our one ask is don’t make it harder for the industry to deliver great value for customers.

“In the last budget, the industry incurred substantial additional operating costs.

“We’re doing our best to deal with them but enough is enough.”

Tesco has said the higher rate of employer national insurance added some £235 million to its yearly costs, while new packaging taxes added about £90 million.

Nevertheless, the supermarket said on Thursday that its profits for the year were likely to be higher than previous estimates.

It now expects underlying earnings for the full year of between £2.9 billion and £3.1 billion, up from its previous guidance range of between £2.7 billion and £3 billion.

It comes after its adjusted operating profit rose by 1.6% to £1.67 billion for the first half of 2025, compared with the same period last year, on the back of UK sales jumping by 4.9%.

Mr Murphy said shoppers were responding well to its efforts to lower prices on hundreds of products, which was boosting the volume of items put in people’s baskets.

This was particularly the case for fresh food, which is largely own-brand, and he said indicated more consumers “scratch cooking” at home.

Across the UK, Tesco has cut the prices of some 6,500 products compared with last year, with an average reduction of around 9%.

An extended period of warm weather also brought in more shoppers buying into summer ranges like barbecue and picnic food and sparkling wine.

Sales of Tesco Finest, its premium own-brand line, jumped by 16% year-on-year – with some 300 new and improved products.

Mr Murphy said Tesco was “betting on a good Christmas”, with consumers likely to approach the festive season in an “affordable and manageable” way.

The boss said the industry remains “incredibly competitive” amid a price war heating up among rival supermarkets, and he was expecting that to continue into the second half of the year.

Tesco also called for large retail stores to be excluded from a higher rate of tax in government business rates reforms which are expected to be introduced next year.

Mr Murphy said: “In many cases they’re the anchor tenant for a shopping centre or a high street – they are what draws all the other smaller retailers to that location and therefore their viability is hugely important to many, many high streets across the country.

“We genuinely believe it’s very important that all large premises are excluded from the higher rate of business rates.”

It comes amid a report in the Financial Times that the Treasury is looking at taking large shops, including supermarkets, out of its highest bracket for the property tax because of criticism from high street bosses.