J Sainsbury, Britain's third-biggest supermarket group, missed fourth-quarter sales forecasts, adding to signs of a slowdown in consumer spending growth as inflation climbs and government spending cuts bite.

Sainsbury, which trails industry leader Tesco and Wal-Mart's Asda in annual sales, said sales at stores open over a year rose 1 per cent, excluding fuel but including VAT sales tax, in the 10 weeks to March 19th.

That was a slowdown from 3.6 per cent growth in the previous quarter and compared with a forecast for 2.4 per cent.

"We expect the consumer environment to remain tough, with our customers facing fuel price inflation, uncertain employment prospects and government spending cuts," Sainsbury said.

A procession of British retailers have said trading conditions have got harder since Christmas, as the government embarks on an austerity drive aimed at slashing its deficit and following an increase in VAT sales tax.

Finance minister George Osborne will be under pressure to show in his budget today that the fiscal squeeze is not taking too much of a toll on growth prospects.

Sainsbury has been growing sales faster than most of its rivals for several quarters, helped by strength in the more affluent south of England as well as an expansion into online and convenience shopping and non-food ranges like clothing.

The group said its fourth-quarter performance was ahead of the broader grocery markst and non-food sales were growing at three times the rate of food.

Total sales, including fuel and new selling space, were up 6.8 per cent in the quarter.

Reuters