THERE are signs that Tesco's recovery plan is beginning to gain traction with industry figures indicated an improving performance.

Britain’s biggest grocer saw its market share slip slightly to 30.9% in the 12 weeks to August 5, researcher Kantar Worldpanel said, but its sales growth of 3.4% was significantly higher than the 0.7% a month ago, suggesting it is now starting to close the gap on its rivals.

Tesco’s sales have come under pressure in recent months, leading to its first profits warning in 20 years, but chief executive Philip Clarke unveiled a fightback, including pumping £1bn into the UK business, with extra staff, revamped stores and more special offers.

Meanwhile, the overall grocery market saw sales grow by 3.9%, up from 2.1% a month earlier, as it benefited after price inflation fell to 3.2% – its lowest for 18 months – and a possible boost from the Olympics.

However, Tesco continued to come under pressure from buoyant rivals, with Asda and Sainsbury’s showing growth of 6.2% and 4.6% respectively.

Of the big four supermarkets, Morrisons put in the weakest performance, with a sales increase of just 1.8%.

But the discount supermarkets continued to thrive, with Aldi seeing growth of 26% and Iceland up 7%.