Further falls in Tesco sales have driven the retailer to its lowest market share since 2004.
Data released by Kantar Worldpanel for the 12 weeks to August 16 showed Britain’s largest grocer saw sales fall 0.9 per cent. It now controls 28.3 per cent of the market.
Grocery deflation rose 0.1 per cent compared to the previous period and food inflation now stands at -1.7 per cent.
Kantar claimed the increasing pressure on food prices reflected the continued march of discount retailers Lidl and Aldi which increased market share steeply over the period as well as other retailers’ response to this.
However the British grocery market’s overall sales over the period increased 0.9 per cent compared with a year ago.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: “Industry growth of around or below 1 per cent has now persisted since summer 2014 and has become the new normal.
"Despite the accelerating British economy like-for like grocery prices are still falling, with a representative basket of everyday items now 1.7 per cent cheaper than in 2014.
“It has been another successful period for the discounters, with growth at Aldi accelerating to 18 per cent. Lidl’s sales have also risen, up 12.8 per cent, taking its market share to a new high of 4.1 per cent."
Asda regained its position as the UK’s second biggest retailer, with 16.6 per cent of the market compared to Sainsbury’s 16.3 per cent.
Mr McKevitt said: "The retailer’s greater focus on non-food items means its market share is traditionally higher in the summer, and it’s expected that Sainsbury’s will again become the number two retailer towards Christmas.”
Iceland has risen sales 3.4 per cent over the period but its market share has remained flat at 2 per cent.