Tesco sales set to slump

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The supermarket giant Tesco is expected to post its weakest underlying UK sales for about 20 years on Wednesday, laying bare the depressed state of spending in the grocery sector.

On the same day, its rival Sainsbury's will also unveil anaemic figures as it and other supermarkets suffer from falling sales volumes.

Tesco is forecast to post a fall in UK like-for-like sales, excluding fuel and VAT, of between 0.5 per cent and 2 per cent over the 13 weeks to 27 August, compared with an actual fall of 0.1 per cent in the previous quarter. Clive Black, an analyst at Shore Capital, said that Tesco had enjoyed positive like-for-like sales volumes for the "best part of 20 years".

The weak UK performance is expected to be offset by strong performances in countries including South Korea and Thailand, helping the group to grow its trading profit by at least 7 per cent to £1.81bn over the 26 weeks to 27 August.