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Sainsbury's has reported like-for-like first half sales up 3.9 per cent, falling behind rival supermarkets.

Sales lagged behind rivals Morrisons, where sales 7.6 per cent, and Tesco, which reported a four per cent rise.

The retailer's share price fell 12.63 per cent by 10:30 BST on the results and in a falling market.

Justin King, chief executive, said: "This is a good result and given the current environment shows how the strength and broad appeal of the Sainsbury's brand has improved substantially during the past four years.

"Like-for-like sales growth, excluding fuel, of 4.3 per cent over the summer quarter and 3.9 per cent for the first half, demonstrates that Sainsbury's universal offer is meeting our customers' expectations for great quality and excellent value."

Traditionally value-focussed retailers such as Asda, Morrisons, Aldi and Lidl appear to be the main beneficiaries from the current spending slowdown and Sainsbury's is trying to catch up.

"During the quarter we continued to develop our offer to help customers manage tighter budgets without the need to sacrifice food quality.

"Customers have responded well and transaction numbers continue to grow. We have continued to expand our own label 'basics' range, which has grown to 550 products, and we now offer a wider range of these products in more stores across the estate," Mr King added.

Own-brand products are increasingly popular, the supermarket said, with customers saving at least 20 per cent by choosing the Sainsbury's equivalent own-brand product.