SAINSBURY'S has sparked fears of a "perfect storm" for the supermarket sector after posting a bigger-than-expected slowdown in sales growth as shoppers cut back on their weekly shop.

The UK’s third biggest supermarket chain said fourth quarter like-for-like sales rose 1% excluding fuel, but implied an underlying fall of up to 1% when VAT is stripped out and an even bigger decline after food price inflation.

Experts warned underlying negative sales growth was here to stay across the sector as customers are battered by Government tax hikes and spending cuts, as well as soaring inflation.

Sainsbury’s shares dropped 6%, while its sales disappointment put “big four“ rivals Tesco and Morrisons under pressure, with shares falling by up to 2%.

The slowdown in sales for the 10 weeks to March 19 marked a sharp reversal of the 3.6% growth seen in the previous quarter and was half the level expected in the market.

Retail analysts at Evolution Securities warned the figures showed “the impact of a perfect storm on the sector“.

They said: “With the consumer facing falling disposable income, sales are being spread more thinly.”

“The UK has never seen sustained negative like-for-like sales across the industry before, but economics and mathematics suggests this will be the new norm.”

Justin King, chief executive at Sainsbury’s, said it had seen “customers manage their spending carefully“ as shoppers buy less in their big weekly shop, topping up only as and when needed.