According to The Guardian, the grocery giant said today (10 April) that its savings push aims to offset rising operating costs, including a £235m blow from changes to national insurance contributions introduced by Chancellor Rachel Reeves.

The announcement came as Tesco warned that earnings will drop further this year due to an increased tax burden and a growing supermarket price war.

The UK’s largest retailer said it now expects adjusted group operating profit to fall between £2.7bn and £3bn – down from £3.1bn last year.

The news sent share prices falling more than 6% following the announcement.

“We’ve ended this financial year with more people than we started the year. So I think we’re using those savings to drive growth,” said chief executive Ken Murphy.

“That growth has come, and that’s allowed us to grow the business and provide more opportunities. We never rule out job cuts. It will be naïve to do that, but at the same time, I think our track record speaks for itself.”

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Tesco’s costcutting measures have now delivered more than £1bn in savings over the past two years, having cut £510m in costs in the last financial year alone.

Tesco is among a number of major retailers warning that Reeves’s NICs hike – which took effect this month – could lead to job losses and push up prices.

Elsewhere, the supermarket also faces mounting pressure on pricing, with rivals slashing costs to win shoppers. Asda recently promised its biggest price cuts in 25 years, sparking fears of a full-blown price war in the sector.

Tesco’s warning triggered a wider sell-off across listed grocers, with Sainsbury’s and Marks & Spencer also falling 4% and 2% respectively.

Murphy said the retailer is not anticipating a major impact from fresh US tariffs, despite wider concerns about global supply chain disruption.

“We continue to make our own preparations, and we don’t believe that the impacts of the tariffs are significant at this stage for the Tesco business,” he said.

“The majority of our product comes from UK suppliers, and we’re coming into a season where that increases.” He added that only 7% of Tesco’s products are non-food, meaning the retailer is “relatively insulated.”