Last year, the company's profits more than tripled due to rising sales and a fall in Covid-related costs.
The UK's largest supermarket chain reported pre-tax profits of over $2 billion, up from the previous year.
In the UK retail sales rose by 2.3% year on year, while group sales rose by 2.5%.
Performance would be affected by the investment needed to keep prices down, as was warned by Tesco.
Ken Murphy said that the external environment has become more challenging in recent months.
Against a tough backdrop for our customers and with household budgets under pressure, we are laser-focused on keeping the cost of the weekly shop in check - working in close partnership with our suppliers, as well as doing everything we can to reduce our own costs.
Mr Murphy said that the cost of living was rising under the number for the overall market.
Products that need a lot of energy are experiencing the highest cost pressures. Less than two weeks ago, Tesco accepted a 20% cost price increase in milk from its suppliers. Arla warned that farmers faced tough cost challenges due to cost increases.
Mr Murphy said that strong product availability had been maintained, but that products such as sunflower oil were a challenge due to the war in Ukraine.
As the UK emerges from the Pandemic, customers are returning to more normal patterns as they rely less on supermarket trips.
The chief executive of Retail Economics said that the increases were "mightily impressive".
Many shoppers will be trading down to own-label brands, changing retailers and scaling back on premium purchases as the cost of living crisis continues.
He said that Tesco was well-positioned because of its loyalty scheme and its negotiating power with suppliers.
Some customers decided to return to shopping in stores as the swine flu waned, which resulted in a 6.5% decline in sales of the online business of the retailer.
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