Underlying sales at supermarket group J Sainsbury rose by 3.4 percent in the first quarter of the financial year, putting the retailer behind Tesco’s 3.5 percent increase and Wm Morrison’s 7 percent rise over similar periods.

Sainsbury’s chief executive, Justin King, said today that food price inflation in his branches “was a little over 3 percent in the quarter, up just 2 percent in the previous quarter, but well below official government statistics.” He said he agreed with Bank of England governor Mervyn King that inflationary pressures would continue for the next six to 12 months, adding that “prices for Sainsbury’s non-food items were still showing some deflation.”

Darren Shapland, finance director, said that most of the 3.4 percent like-for-like sales increase came from food price inflation, with “volumes just above flat”. The company’s fuel sales benefited from higher prices and from extra volumes as motorists shopped around for cheaper petrol.

Mr King said he was pleased with the company’s performance in the quarter, which met the group’s expectations. Although the group adjusted the number to take account of the changed timing of the Easter weekend, the quarter compared with a strong period last year, when like-for-like sales were up 5.1 percent.

Mr King said Sainsbury was “fighting hard for customers” whose household budgets are being squeezed by increasing its emphasis on promotional offers, extending its “Basics” range of cheaper foods and launching a “Feed your Family for a Fiver” campaign.

Recent consumer research suggests customers were cutting back on eating out in restaurants which could benefit sales of Sainsbury’s, up-market, Taste the Difference range.

Mr King was happy to report that non-food sales were continuing to “grow strongly” as ranges were expanded. Online sales improved by more than 40 percent, and improvements to the supply chain in recent years meant product availability in shops had risen further.

The company’s total sales in the 12 weeks to June 14th rose by 8.1 percent, given a boost by the increase in fuel prices.

Excluding new store openings like-for-like sales rose 7.3 percent, including fuel sales.

Echoing last weeks trading update from Tesco, which said its growth had slowed from more than 4 percent in the early weeks of its fourth quarter, the 3.4 percent increase in sales marks a slowdown from the 4.1 percent growth Sainsbury reported in the fourth quarter of last year.

Sainsbury shares have dropped since its 600p a share bid from a Qatari-backed investment group was dropped last November - Qatar holds a 24.9 percent stake in the company. Shares were 5p lower in early trading at 331p.