Tesco's recovery plans in the UK received a setback today as the supermarket chain reported a fresh dip in quarterly sales.
Chief executive Philip Clarke, who is overseeing a £1 billion plan to refresh the business, said the 1.5% decline on a like-for-like basis was in line with weaker growth across the whole market.
The group is also facing challenging conditions in its international markets, with underlying sales sharply lower in Thailand, South Korea and Ireland during the quarter to November 23.
The 1.5% decline in UK sales was in line with City forecasts and comes after a flat performance in the previous three months. When including changes in store space, the sales figure increased by 0.9%.
Mr Clarke said: "Continuing pressure on UK household finances have made the grocery market more challenging for everyone since the summer and our third quarter performance reflects this."
He said recent changes to the business, such as the relaunch of its Finest range and the refurbishment of more than 100 stores in the quarter, had been well-received by shoppers. Its online business has also recorded a record level of grocery orders.
As well as the squeeze on household spending power, Tesco has been impacted by the expansion of rivals in the discount sector. Last weekend, Lidl said its like-for-like sales were growing at 18% as it set out plans to more than double its 600-strong UK estate.