The boss of Tesco has warned Labour against imposing price caps on essential groceries, saying the idea was not ‘necessary or desirable’.

Ken Murphy also pushed back on accusations that supermarkets had profiteered from soaring petrol costs due to the Iran war, saying prices at its pumps were falling.

Last month it emerged that government officials had raised the idea with supermarkets of putting a voluntary cap on prices of basic items such as milk, bread and butter, although they swiftly backtracked after a backlash.

Marks and Spencer boss Stuart Machin branded the plans ‘completely preposterous’. Murphy, Tesco’s chief since 2020, said caps were unnecessary as the ultra-competitive nature of the grocery market meant firms had to keep prices down to avoid losing customers.

‘We don’t believe any sort of regulation on pricing of groceries is either necessary or desirable, because we operate in a highly competitive market. This industry is very good at self-regulating from a price perspective,’ he said.

The comments came amid growing fears that a Labour leadership squabble could result in a lurch to the Left, which could see populist anti-business policies surface.

Murphy was speaking to reporters as Tesco, Britain’s biggest supermarket, revealed a 1.8 per cent rise in UK sales for the three months to the end of May – less than analysts had predicted.

That sent its shares down 0.9 per cent, or 4.3p, to 452.4p yesterday, although it kept full-year profit guidance unchanged, at between £3billion and £3.3billion.

While Murphy said there was ‘no doubt’ concerns about the war in the Middle East were affecting consumer behaviour, he said poor weather in early 2026 had been a much bigger factor behind the slowdown in sales growth.

He said concerns about a spike in food price inflation due to the conflict had not materialised. ‘In April there were rumours and competitors talking about 9 per cent or 10 per cent inflation. 

We don’t see anything like that and we continue to stick to that view,’ Murphy said, adding that it was unlikely that shoppers would see a repeat of the food price jump that occurred after Russia’s full-scale invasion of Ukraine in 2022.

‘If you think about the [Middle East] region it’s not a big food producer, unlike Ukraine, so you don’t have the same shock.

‘Similarly, a lot of people, including our suppliers, were caught on the back foot without hedging on energy last time and I think they’ve learned their lesson,’ he said.

He said the dip in global oil prices following the peace deal this week would be passed on to motorists, adding that it was ‘the slowest to increase prices’, and had gained market share.

‘I’m not concerned about any risk of people thinking we are profiteering,’ Murphy said.

Tesco has steadily managed to increase its market share even as competition has intensified. It now stands at just over 28 per cent, according to data from Worldpanel, its highest level in more than a decade.