The group, which has a 27% share of Britain’s grocery market, said today it made retail adjusted operating profit of £2.49 billion (US$3.11 billion) in the year to Feb 25 – in line with guidance of £2.4-2.5 billion but down from the £2.65 billion made in 2021/22.

Group sales rose 5.3% to £57.6 billion.

“It’s been an incredibly tough year for many of our customers, and we have been determined to do everything we can to help,” chief executive Ken Murphy said.

The group, which said it had seen “unprecedented levels of inflation in the prices we have paid our suppliers”, pledged to do everything it could to keep customer prices down.

It forecast retail free cash flow within its target range of £1.4-1.8 billion and adjusted operating profit of £130-160 million for its bank division.

British consumers have been pressured for more than a year by high inflation which has outstripped pay growth for almost all workers. Last month government forecasters estimated households were in the midst of the biggest two-year squeeze in living standards since comparable records started in the 1950s.

UK consumer price inflation ran at 10.4% in February, the most recent official data shows. In March, grocery inflation rose to a record 17.5%, according to industry data.

Rising utility and mobile phone bills along with higher taxes and interest rates are also hitting household budgets.

Tesco is, however, benefiting from people looking to save money by cooking and entertaining at home more rather than dining out.

It said fourth quarter UK like-for-like sales rose 7.6%, having risen 4.3% in the third quarter.

Monthly industry data has shown Tesco performing solidly versus its traditional rivals, though it is still losing market share to German-owned discounters Aldi and Lidl, who are continuing to open lots of new stores.

Tesco is paying a full year dividend 10.9 pence a share, in line with the previous year, and said it would buy back another £750 million of shares over the next year.