Supermarket giant Asda has reported plummeting profits as spiralling costs and investing in keeping prices lower for customers hammered its bottom line.

For the year ending December 31, 2022, Asda reported adjusted EBITDA of £886m, down 24% year on year, while sales inched up 0.1% to £20.4bn. Like-for-like sales for the year were down 0.2%.

The grocer blamed investing to absorb cost-price inflation and keeping prices as low as possible for customers for the falling profits.

Asda reported a strong upturn in the second half of the year, with like-for-like sales up 5.1% for the period, driven by price investment and new propositions to deal with rising living costs.

The retailer also said it continued this “positive momentum” into the start of 2023, with February like-for-like sales up 6.8% year on year.

Asda co-owner Mohsin Issa said: “Asda delivered a highly resilient performance last year. We took a conscious decision to support customers by investing heavily to mitigate the impact of inflation and keep prices as low as possible.

“Although this contributed to a decline in profitability, it was the right thing to do for our customers and will ultimately help to deliver long-term growth.

“We are pleased with the strong sales growth we saw in H2, driven by investments in value and quality, and this positive momentum has continued into 2023 – with like-for-like growth of 6.8% in February.

“As well as tackling the issues of the day, we also made good progress laying the foundations to restore Asda to the number-two position in UK grocery, focusing on giving customers desirable products at affordable prices and the ability to shop with us whenever and however they like.

“Last year saw challenges facing businesses and consumers alike and I am proud of the way Asda colleagues responded to support our customers and communities. They worked incredibly hard throughout the year to serve customers, keep prices in check and launch new initiatives, like Just Essentials and Kids Eat for £1, to help customers save money.”