Sainsbury's sales growth stutters

SUPERMARKET Sainsbury's became the latest casualty of sliding food inflation today as sales growth stuttered in its latest quarter.

Like-for-like sales excluding petrol at the UK's third biggest grocer eased to 1.1 per cent in the 12 weeks to June 12, although the firm reported a "good start" to the new year.

The figures - which include higher VAT - match the 1.1 per cent sales growth reported by market leader Tesco as firms struggle with comparisons against a period of rising food prices last year.

While sales growth fell to its lowest level since the end of 2004, its World Cup ranges are selling well - including the vuvuzela horns which have been the soundtrack of the tournament so far.

The retailer - which picked up on the horns after last year's Confederations Cup in South Africa - has sold 40,000 England-branded vuvuzelas so far at 2 each and expects to shift 75,000 over the course of the competition.

On Saturday when England played their World Cup opener against the USA, Sainsbury's said it sold a vuvuzela every two seconds.

Despite the trading boost from the tournament, the supermarket expects consumers to remain under pressure as next week's emergency Budget looms - along with potential tax hikes to tackle the deficit.

But trading is in line with expectations and the retailer said its drive to open new space had paid dividends with new stores performing more strongly than expected.

Sainsbury's - which has identified non-food sales and smaller convenience-style stores as key areas of growth - remains on track to open 1.45 million square feet in new space during the current financial year as competition for hard-pressed shoppers intensifies.