Tesco CEO cautious on deflation outlook

The head of retailer Tesco, said on Tuesday he was not anticipating deflation becoming a major characteristic of the grocery industry.

"There are probably more forces for inflation in our industry ... than deflation" said Terry Leahy at the IGD conference, pointing to the challenges faced by food producers such a rising populations and changing diets in Asia.

Food inflation has fallen recently as commodities prices have eased, contributing to profit warnings from European and U.S. supermarket chains.

Leahy also said he expected a "slow, steady" economic recovery, echoing comments he made last week when Tesco published first-half results.

Shares in Tesco were down 1 percent at 381.1 pence at 11:36 a.m.