Tesco non-exec buys a big stake

Harald Einsmann, a non-executive at Tesco, spent £184,000 on shares in the supermarket giant late yesterday afternoon.

He bought 48,400 shares, paying just over 380p a time.

Einsmann joined the board of Tesco in 1999, the same year he stepped down as president of US consumer goods giant Procter and Gamble for Europe, the Middle East and Africa, having served there since 1984.

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The German's purchase of shares comes soon after Tesco posted a rise in profits in the half year to 29 August. Pre-tax profits rose by 1.5% to £1.42bn as sales climbed by 8.3% to £30.4bn.

Tesco's share price was close to 400p soon before those results were announced and are still up by about 20% over the past year.

Some analysts are concerned that Tesco, in common with other supermarkets, will begin to feel the pinch of food deflation. Tesco's smaller rival Sainsbury's recently said market growth was likely to slow due to 'reduced inflation.'

The broker Citigroup said that food price deflation has already dented earnings at US food retailers such as Safeway and Krogers and that a similar experience may be in store for UK supermarkets.

On Tuesday, the Office of National Statistics (ONS) said lower food prices contributed to a fall in the UK Consumer Price Index (CPI), a measure of inflation, to 1.1%.