Profit after tax jumped 13% to £1.1 billion (US$1.4 billion) in the six months to late August from a year earlier with sales rising as inflation cooled, Tesco said in a statement.

The supermarket giant reduced costs by £260 million in the first half and said that it expects to cut them by £500 million over the full year.

“We are in good shape, with volume growth delivering strong financial performance,” Tesco chief executive Ken Murphy said in the earnings statement.

The company noted that “sales inflation returned to more normalised levels as cost inflation headwinds eased”.

Soaring inflation in recent years sent costs jumping for companies while also reducing the amount of goods sold, lowering profits and in some cases causing huge losses.

UK inflation peaked at 11.1% in October 2022 but has since cooled markedly to 2.2%, slightly above the Bank of England’s target.

Tesco said growth was supported thanks to it cutting prices on 2,850 products by an average of around 9%.

It attracted customers with price offers in the face of competition from German-owned discounters Aldi and Lidl.

Tesco said volume of food sales in its main UK market rose 4.9% in its first half, with strong demand for fresh goods.

It raised its forecast for retail operating profit for the full year to £2.9 billion, up from its previous guidance for £2.8 billion.