"The truth is in the first half of this financial year our customers actually saw deflation," Chief Executive Ken Murphy told reporters after the group published better-than-expected first-half results.

He said that trend had also carried on into its second half so far.

"As we speak today we are still in a deflationary situation. We work consistently with suppliers to manage and mitigate any inflationary impact of commodity prices, transport prices and it's an ongoing process," he said.

However, he did note that in recent weeks to protect availability Tesco has seen some "promotional de-escalation".

"But that is really only to make sure we are staying in stock for customers," he said.

(Reporting by James Davey; Editing by Kate Holton)