Tesco’s UK trading profit fell by 1% last year to £2,480m, after what it calls a “disappointing sales performance” driven by food and grocery.

Group sales, however, are up 7.4% to £72bn and pre-tax profits up 5.3% to £8.3bn.

After a solid first half, UK like-for-like sales, excluding petrol, suffered particularly in the second half of the year ending 25 February, in part due to reduced levels of inflation, it said.

“This was the result of a disappointing sales performance, particularly during the seasonally important Christmas period, combined with the impact of our step up in the investment in our customer offer,” Tesco said.

“While our international business is delivering excellent growth, contributing £1.1bn of profit to the group, we fully recognise that we need to raise our game in the UK,” said Philip Clarke, chief executive.