Despite beating market expectations, sales continue to slide for Tesco after it reported a 1.3% fall in like-for-like UK sales for the first quarter of its financial year. Market analysts had predicted a sales drop of up to 2.5% at Britain’s largest retailer.

Despite the continued drop in sales, the result is an improvement on the previous quarter when sales fell by 1.7%. Tesco said the result was driven by investment in lower prices, greater product availability and weakening commodity markets, despite significant food deflation of 2%.

Tesco chief executive Dave Lewis said customers are now experiencing better service, better availability and “lower, more stable prices.”

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“Whilst the market is still challenging and volatility is likely to remain a feature of short-term performance, these first quarter results represent another step in the right direction,” added Lewis.

Like-for-like sales in Tesco’s Irish stores were back 4.4% for the three months to the end of May, highlighting the difficulties the retailer continues to experience here. Tesco’s share of the Irish grocery market has fallen to 25%, placing it side by side with rival Supervalu as the retailer with the largest of the market.

Tesco said it has made significant investment in lower prices for our customers in Ireland with prices now frozen across more than 1,300 staple products. And while this led to an improvement in Tesco’s performance here compared to the previous quarter, sales were still held back as a result of a difficult competitive environment in Ireland, including high levels of competitor couponing.