London, February 8, 2026, 09:40 GMT — Market closed
- Tesco ended the session at 452.10 pence, a gain of 0.62%.
- UK stocks finished the week on a positive note, with investors parsing signals from the Bank of England on interest rates.
- Supermarket pay hikes and renewed funding chatter at a competitor have shoved costs back into focus.
Tesco Plc finished at 452.10 pence on Friday, gaining 0.62%. The UK market is closed for the weekend, so trading will pick up again Monday. 1
Tesco barely budged, yet the company now finds itself caught between two ongoing questions: just how soon will UK interest rates actually drop, and how aggressively are wages and pricing still feeding into the grocery sector?
That’s important for investors right now. Grocery runs on volume and razor-thin margins, so even minor changes—whether it’s labor costs ticking higher or a pricing shift—can hit earnings harder than a fleeting sales headline ever would.
The FTSE 100 edged 0.6% higher Friday, marking its second consecutive weekly increase. Bank shares did the heavy lifting, even as RELX slipped again. Investors were also watching signals from the Bank of England, which indicated Thursday that rate cuts could be on the table if inflation keeps cooling. 2
On Friday, Bank of England Chief Economist Huw Pill urged caution, flagging that a recent drop in inflation—largely the result of temporary effects—shouldn’t be overinterpreted. The central bank left its Bank Rate untouched at 3.75% this week. “The disinflation process is still not complete,” Pill said. 3
Labour costs are squeezing margins again. Lidl GB plans to lift entry-level hourly pay from March 1, tacking on a 29 million pound bill after Aldi UK and Sainsbury’s made similar pay adjustments. Britain’s minimum wage bump kicks in April, according to Reuters. 4
Tesco’s caught in the middle, too. Higher wages help keep staff and improve service, sure, but they’re also pushing costs higher—just as price-sensitive shoppers keep switching to cheaper options and competitors turn up the heat with fresh deals.
The sector’s balance sheets have come into focus, too. Morrisons is looking at ways to raise as much as 1 billion pounds, using some of its owned store properties as collateral, Sky News reported Friday. CBRE has been brought in to consider possibilities, Reuters said. 5
Tesco hasn’t given a big update since January, when it said it was expecting full-year profit to land toward the top of its guidance, following a bump in underlying UK sales during Christmas. “Competition is as intense as ever,” chief executive Ken Murphy said. 6
Tesco hasn’t paused its share repurchases. Back in January, the company disclosed it picked up close to 480,000 shares, moving to cancel them as part of the ongoing £1.45 billion buyback. 7
But laying out the risks isn’t hard. If wage inflation drives up costs for the industry while a pricing war leaves shelf prices stuck, margins can take a hit fast — and a hesitant Bank of England might leave households under pressure for longer.
Tesco’s next key event comes on April 16, when it’s set to report full-year earnings. Until then, investors will be watching closely to see how wage changes in the sector might start showing up in prices. 8
