After a year marked by persistent food inflation, competition from discount rivals, and major cyberattacks, UK retailers are expected to see an improvement in profits in 2026. Tesco, Sainsbury’s, and Marks & Spencer will release their Christmas sales figures later this week, laying the groundwork for the anticipated profit recovery this year. Data shows that the three supermarkets’ combined earnings per share are projected to grow by 13.5% this year, following a 1.5% decline in 2025. This growth rate outpaces the broader UK consumer staples sector and exceeds the 10% projected earnings growth for the entire FTSE 100 index. Throughout 2025, food inflation remained stubborn, forcing retailers to defend against low-cost competitors through price matching and expanded promotions to retain market share; simultaneously, government tax hikes on employers led to rising labor costs for supermarkets. Citi analyst Monique Pollard believes that while food inflation remains sticky, it is expected to slow to 3% in 2026.