Tesco (LON: TSCO) share price has been in a tailspin for the past few weeks. The price recently fell to its fresh 3-month lows and has been trading sideways since then. The latest analysis reveals that relief once may be on the cards after such a sharp decline.
The UK shares lost most of their gains on Wednesday as the FTSE 100 index dropped to fresh weekly lows. The benchmark index fell by 50 points and was 0.67% down till press time. The sticky inflation data in the UK is a major concern for investors.
Higher Wages Acting As A Tailwind For Inflation
The retailers like Tesco and Sansbury always keep a close eye on inflation. A significant increase in inflation often results in a decrease in purchasing power which affects the sales of grocery retailers. The UK is now the only economy among the G7 countries where inflation is still on the rise. This is one of the primary reasons for a downtrend in Tesco share price.
According to the latest news, Sansbury boss has recently stated that the permanent rise in labor costs may slow down the decrease in inflation, and prices may never come back to where they were before the Ukraine war.
Tesco Share Price May Retest February Lows
While LON: TSCO chart is showing a bullish divergence on the Money Flow Index (MFI), there is still a possibility of a retest of the February 2022 lows. A higher chance is of a strong bounce from the 240p-250p region as it is a major demand zone for Tesco stock.
Tesco share price forecast depends on the outcome of the buying pressure at the current level. If the 240p level doesn’t hold, the next major support lies at 222p. Many analysts are also predicting a recession in the US & UK later this year. This may act as a catalyst for such a drop.
In the meantime, I’ll keep sharing updated Tesco stock price forecasts and my personal trades on my Twitter where you are welcome to follow me.