Retailer Tesco reported sales growth of 8.8 per cent for the group in the third quarter, although conditions remained tough in some markets.
The retailer, which has over 4,300 stores in 14 countries, said overall group sales were bolstered by overseas revenue which rose 5.4 per cent at constant exchange rates, although that too was weaker than the 7.7 per cent expected by analysts.
In Europe, sales grew by 5.7 per cent.
"We are seeing improving customer confidence and encouraging trends in both the UK and our international businesses, although recessionary conditions still exist in a number of markets," Tesco chief executive Terry Leahy said in a statement today.
The supermarket group, which makes about three-quarters of its profit in Britain, said sales at UK stores open at least a year rose 2.8 per cent, excluding petrol and Vat, in the 13 weeks to November 28th - its fiscal third quarter.
That is slightly down on the 3.1 per cent reported in the second quarter. It is also shy of the average forecast of 3 percent in a Reuters poll of 12 analysts and towards the bottom end of estimates that ranged between 2.7 and 3.7 per cent.
It did not give specific figures for its Irish operations.
Tesco finance director Laurie McIlwee said he did not expect a planned reversal of last year's cut in Vat to derail recovery, although he warned against raising the rate above its former 17.5 per cent rate as the government battles to tackle its huge deficit.
"I don't think that the impact (of Vat rising to its former rate) will reverse the trend in customer confidence," Mr McIlwee said. "If the Vat goes above that (17.5 per cent) it could be more negative. Just as consumers are getting more confident, to start indirectly taxing people (at a higher level) will be a strain on their budgets."
In Britain the group has lagged domestic rivals for much of this year, hit by its greater exposure to discretionary non-food ranges and by the launch of a discount range, which depressed sales by value.
But recent market data suggest it has fought back, helped by a doubling of customer reward points in August.
Its shares have lagged the DJ Stoxx European retail index by 1 per cent this year and closed at 435.65 pence yesterday, valuing the group at £34 billion.