Tesco warns suppliers not to use weak pound as excuse for price hikes

UK supermarket giant Tesco has warned suppliers not to inflate prices to compensate for the slump in sterling so they can report healthier profits.

Chief executive Dave Lewis (pictured) said suppliers should be able to report results in constant and current exchange rates to take into account any volatility.

"The only thing we would ask of companies that are in that position is they don't ask UK customers to pay inflated prices in order that their reporting currency is maintained. They don't do that for countries outside of the UK," he said.

“I spent 28 years working in a multinational and there are always elements of currency volatility in businesses like that,” said Lewis.

“When there is devaluation, what multinationals do is they present sales at constant and current exchange rates and the City understands."

Lewis, who worked for Unilever, was speaking for the first time since a row in October with his old company when it tried to increase the prices of goods like Marmite, the yeast spread.

Unilever had claimed it needed to cover higher import costs even though Marmite was being made in the UK. Tesco withdrew the product from its shelves.

Tesco and Unilever reached an undisclosed agreement to settle the matter.

The moves come after a slump in the pound since the UK's decision in June to leave the European Union.