Supermarket giant Tesco said sentiment among shoppers has been impacted by the conflict in the Middle East but stressed the war has not yet led to higher prices.
It came as the FTSE 100 firm revealed a weaker-than-expected increase in sales for the past three months.
Boss Ken Murphy said: “The war in the Middle East has impacted consumer sentiment, more to do with fear about what might happen.”
However, he added that there has not yet been a “material” impact to shopper behaviour and consumption as a result.
Mr Murphy also said the conflict, which has pushed oil and gas prices higher, has not yet contributed to sharper food price inflation.
Tesco said its food inflation in the latest quarter was below the 2.2% reported by the Office for National Statistics on Wednesday, which was the lowest since 2024.
Price inflation over the past three months was also at a slower rate compared with the previous quarter.
It comes after the Institute of Grocery Distribution (IGD) warned earlier this week that food inflation could peak at 5.5% in the second half of this year.
However, inflationary concerns could be eased after US President Donald Trump and Iran’s Masoud Pezeshkian signed an initial deal to end the war.
It came as the retailer revealed that total sales increased by 1% to £16.8 billion over the 13 weeks to May 30, compared with a year earlier.
Tesco UK and ROI (Republic of Ireland) saw like-for-like sales grow by 1.8% on the back of positive growth in food sales.
Nevertheless, it represented a slowdown in growth compared with the prior quarter.
The grocery firm said food sales were 2.6% higher, with 3.6% growth for fresh food and a 9% jump across its Finest range of products.
The group held firm on its profit guidance for the year, indicating that it is set to deliver operating profits of between £3 billion and £3.3 billion.
Mr Murphy said: “I am pleased with our progress in the first quarter, with customer satisfaction up strongly and continued sales growth building on the exceptional performance we delivered last year.
“With the conflict in the Middle East creating ongoing uncertainty for many households, we remain focused on giving customers the very best combination of price, quality and service.”
The update came ahead of Tesco’s annual general meeting on Thursday.
Shareholders will vote on numerous resolutions during the meeting, including for the group’s executive pay package, which saw Mr Murphy given an annual pay deal of £10.8 million for last year.
