Tesco share price continued to hover close to its all-time high making it one of the best-performing companies in the FTSE 100. It has jumped by 40% from its lowest level this year, a trend that may continue after the latest UK inflation report. 

Tesco could benefit as UK inflation jumps

Tesco, the biggest retailer in the UK, will be one of the top beneficiaries as the UK consumer inflation continues soaring. Data released today, August 20, showed that the headline CPI jumped from 3.6% in June to 3.8% in July, higher than the expected 3.7%.

The CPI rose from minus 0.1% on a MoM basis to 0.1% in July. Another part of the report showed that the core inflation, which excludes the volatile food and energy prices, jumped from 3.7% to 3.8%, moving further away from the Bank of England’s target of 2.0%. 

A separate report by the ONS showed that UK retail price index jumped to 4.8% from the previous 4.4%. 

These numbers mean that inflation is a major challenge for the UK economy. On the positive side, this could benefit Tesco, the biggest retailer in the country. 

Tesco is known for having the most stores in the UK and for having lower prices than other retailers. It achieves that by negotiating with its supplier to achieve better prices. This explains why the Tesco share price has done well in the past few years. 

Earnings demonstrated strong growth

The most recent results showed that Tesco’s business continued doing well. Its sales jumped by 4.6% in the last quarter to £16.38 billion, continuing a run that has been going on. 

The UK’s business rose by 5.1% to £12.3 billion, while the Republic of Ireland (ROI) rose by 5.5% to £772 million. Booker, its revenue rose by 2% to £2.3 billion. 

Tesco business has also continued with its market share gains. It now has a market share of 28%, which has grown for 24 consecutive gains. This trend will continue if consumer prices accelerate. 

Tesco share price will also benefit from its share buybacks and dividends. It started a £1.45 billion share buyback, which will be completed by 2026. These buybacks have dropped its outstanding shares to 6.7 billion, down from 7.67 billion in 2021. 

Tesco share repurchases have coincided with its growing dividend. It now has a dividend yield of 3.6%, higher than the 2021 level of 1.4%.

Tesco share price analysis

TSCO stock chart | Source: TradingView The daily chart shows that the TSCO stock price has jumped in the past few months. It moved from a low of 302p in April to a high of 423p. 

The stock has moved above the key resistance point at 387p, its highest point in February. It has remained above all moving averages, a sign that bulls are in control. 

Therefore, the stok will likely continue rising as bulls target the resistance at 431p. A move above that level will point to more gains, potentially to 500p.

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