Tesco has admitted keeping its beer prices low as a part of a drive to protect customers from the impact of inflation.
As Britain's biggest retailer reported an 11.8 per cent rise in profits to more than £2.84bn for the year to the end of February, chief executive Terry Leahy told the BBC Tesco's beer prices had fallen over recent months.
Pressed on the impact of rising food costs on its prices, Leahy said that overall food price inflation at Tesco had peaked at around three per cent over recent months.
Leahy, who was dubbed 'the godfather of binge-drinking', by MP John Grogan in December last year, said that products where grain was a big percentage of production costs, such as bread and chicken, had seen sharp price increases.
In contrast, he cited beer, where grain represents three per cent of production costs, as a product where the price charged to customers had fallen over recent months. The overall aim was to keep total shopper spend low, said Leahy.
Figures released by the Office of Fair Trading yesterday showed a 2.3 per cent rise in the factory gate price of beer from February to March, as rising costs and the Budget duty hike hit brewers.