Tesco has reported a like-for-like sales rise of 2.5 per cent for the seven weeks to January 10th – its smallest Christmas rise since 1993.
The supermarket has announced plans to create 10,000 new jobs by December despite the setback.
The like-for-like sales discounted gains from new stores. Total group sales rose by 11.6% during the period, helped by overseas growth.
International sales were up by 32.7%, whilst sales in Asia were especially strong, up 43%. Overall European sales grew 24%.
The news comes on the day that the Chamber of Commerce suggested there had been a "frightening deterioration" in the UK economy towards the end of 2008.
Tesco, which operates in 13 countries, said its performance had been "against the background of challenging trading conditions in all of our markets caused by the global economic slowdown".
The supermarket saw UK sales growth of two per cent in the 13 weeks to 22 November.
The supermarket described online sales as "very strong" in the run-up to Christmas, with tesco.com and Tesco Direct seeing total combined sales up 18% at 273m.