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Tesco shares fell 3.11 per cent after the retailer reported slower sales growth for the first quarter.

Britain's biggest grocer reported like-for-like sales of 3.5 per cent for the 13 weeks to May 24th, lower than the four per cent Tesco predicted in April.

Group sales grew by 13.7 per cent, helped by the retailer's international arm.

Tesco said the group made "solid progress" in the UK in the first quarter.

"Core food categories showed good growth as we helped customers spend less at a time when household budgets are becoming stretched. The business has also coped well with the more cautious mood on non-food spending," chief executive Terry Leahy said in a statement.

Tesco added "although food category performance has been good, our rate of growth in non-food has eased as consumers have become more cautious with their spending during recent months".

International sales increased by 26.6 per cent, driven by a particularly good performance in Europe, where Tesco registered 32.4 per cent sales growth.

Tesco said it is on track to deliver more than 9.8 million square feet of new selling space in its international division, although warned that this will be weighted more than usual towards the second half of the year.

Total sales in the UK grew 9.4 per cent, excluding petrol. Including petrol, which Tesco said has seen "significant inflation" in recent weeks as a result of rising oil prices, like-for-like sales grew by 6.4 per cent.

Consumer confidence polls reveal sentiment is at an all-time low.

A survey from the British Retail Consortium released yesterday revealed three-quarters believe now is not a good time to spend on things they want or need while one in five do not have the money for discretionary spending.