Morrisons sales growth slows over Christmas

Wm Morrison Supermarkets reported a slowdown in sales growth over Christmas and predicted cash-strapped shoppers would remain reluctant to spend this year, despite an easing of inflationary pressures.

Britain's fourth-biggest grocer behind J Sainsbury, Wal-Mart's Asda and industry leader Tesco) said sales at stores open over a year rose 0.7 per cent, excluding fuel and VAT sales tax, in the six weeks to January 1.

That was down from 2.4 per cent growth in its fiscal third quarter and compared with an average forecast of 1.3 per cent growth in a Reuters poll of 14 analysts.

"In a challenging Christmas period for the consumer the group has delivered sales growth in line with the market," Morrisons said, adding its expectations for its full financial year remained unchanged.

Many British retailers are struggling as disposable incomes are squeezed by higher prices, muted wages growth and austerity measures, and as shoppers worry about stagnant house prices, rising unemployment and the euro zone debt crisis.

Analysts had expected Morrisons to produce the best performance of the three major British grocers reporting Christmas figures this week, due to its strength in fresh foods and to its lower exposure to discretionary non-food goods, where shoppers have been making the biggest cutbacks.

Sainsbury's reports third-quarter sales on Wednesday, while Tesco publishes Christmas figures on Thursday.