Tesco lifts sales but joins calls for interest-rate cut

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The retailing behemoth's plans for world domination appear relentlessly on track, with a march on the US beginning in earnest last week and expansion continuing in Europe, Malaysia and elsewhere.

Group sales in the 13 weeks to 24 November were up 11.8%. UK likefor-like sales rose 4.1% in the period - a result few retailers can match at a time when consumers are nervous about mortgage costs and a recession.

The UK result was slightly below some forecasts, suggesting Tesco's market share may be slipping as J Sainsbury and Wm Morrison improve their offer. The world's third-biggest retailer called for the Bank of England to take action to ease the strain on the public's pocket.

Finance director Andrew Higginson said: "Our firm view is that we should be seeing a move down in interest rates sooner rather than later."

The Bank of England monetary policy committee is nervous about inflation on everything from food to fuel, but Higginson says it is running at just 0.8% in its stores, making a cut in rates a matter of "common sense".

The MPC will reveal its decision on Thursday, with most economists expecting it to resist calls for a change. While pubs, clothing shops and restaurants are suffering from the downturn, supermarkets are generally the last to be affected.

Tesco chief executive Sir Terry Leahy said: "We've maintained pleasing progress during the third quarter across the group, international delivering a particularly strong performance and the UK has again done well."

Tesco opened five Fresh & Easy convenience stores in America last week, its first steps toward becoming a major player in the market with 1000 shops and annual sales of $10 billion (£4.8 billion). While it insists sales at these shops have taken off, it is unlikely to provide an official breakdown for a while yet.

Tesco shares are up 8% this year, and were today at 488p. Numis Securities predicts it will make a profit of £2.87 billion in 2008, and gives a share-price target of 570p.