Tesco's sales growth is slowing as consumer demand becomes more subdued.

The group said like-for-like sales in its 700-plus UK supermarkets for the three months to May 18 grew 4.5 per cent.

That compares with a 4.9 per cent rise for the previous quarter which included Christmas, and 6.4 per cent increase in the quarter before that, which included the post September 11 period.

Corporate affairs director Lucy Neville-Rolfe said: "I think you have seen from other retailers that there has been a slowing in the market - we paged that up at our year end."

She said the group was expecting to return to "more normal levels of growth". Tesco's more normal sales growth is three to four per cent.

The group, which held its annual meeting in London yesterday, was also continuing to see prices come down, she said.

"Last year we had a very buoyant time, I think a lot of people were staying at home after September 11."

The group was also driving growth from services such as Internet banking and its expansion overseas.

Tesco is aiming to have as much store space overseas as it does in the UK by the end of 2003. It currently has around 250 international stores.

In the UK it is the market leader with around 16.7 per cent of the market.