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Tesco reported today a slowdown in sales growth, with UK like-for-like sales, excluding petrol, up just two per cent for the last three months.

This compared to 4.8 per cent a year ago.

Internationally sales growth was at 11.7 per cent.

Terry Leahy, Tesco chief executive, said: "We are pleased with our progress but we are also realistic - the current economic climate, and the strain this is putting on consumers everywhere, is something that all businesses are feeling, including ours.

"The UK has again done well - with 300,000 more customers a week and improving volume growth in our core food categories, driven by the early success of our new 'Discounter' products and related changes - and with non-food sales holding steady."

The firm said it had responded to consumers demand to spend less – as budgets are still hit by high food and energy prices despite inflation is now starting to fall – by launching a 'Discounter' range.

The move is also a bid to retain shoppers who have started to move to discount stores such as Lidl and Aldi.

Tesco reported the discount brand now accounted for five per cent of food and grocery sales, and the lower prices had depressed sales figures.

"By giving customers more affordable choices, we have deflated our sales during the quarter by between two and three percentage points," a Tesco statement read.

"As a result, over 300,000 more customers are shopping with us every week and we are also beginning to see strongly improving sales volumes."

Tesco also reported a slowdown in sales of non-food items – such as higher value products that have driven growth in recent years.

Mr Leahy said: "I remain confident that Tesco can maintain a strong business performance and pursue its long-term strategy even in tough times."