Supermarkets drag down London indexes on spending jitters

London’s top indexes were muted today as investors ditched shares in supermarkets despite Tesco posting bumper profits.

The capital’s premier FTSE 100 index edged 0.05 per cent higher to 7,580.80 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, dipped 0.12 per cent to 20,984.45 points.

Sentiment toward British supermarkets has taken a hit from experts anticipating a pull back in consumer spending this year amid the tightest cost of living squeeze in a generation.

The UK’s largest supermarket, Tesco, this morning said operating profits jumped 65 per cent.

However, the firm downgraded profit forecasts for the year on concerns that households will look to cut back to protect their finances amid historically high inflation.

Tesco was among the worst performers on the FTSE 100, dropping two per cent.

Middle-class favourite and online supermarket Ocado fell 2.62 per cent.

Ocado had been a big winner from the pandemic as a result of consumers doing their weekly shop online amid Covid-19 restrictions.

Sainsbury’s fell 2.45 per cent.

Fresh data released by the Office for National Statistics this morning revealed inflation is running at seven per cent in the UK, weighing on market sentiment.

On the FTSE 250, retailers also led losses. Cambridge-based cybersecurity firm Darktrace was the biggest faller. 

The pound was flat against the dollar.