Asda has said it is continuing to grow market share, driven by attracting more customers with its low prices and improving product quality.

In its second quarter, like-for-like sales have eased slightly to 7.2%, compared with 8.4% in the previous quarter. It did say however that its market share is up from 16.7% to 17%.

Asda chief financial officer Judith McKenna said the slowdown was largely the result of a drop in food inflation, which she said had hit a two-year low.

Asda said its aggressive cost reduction programme has meant it is also growing its profit ahead of sales.

The Wal-Mart owned grocer said food, home and leisure and George clothing are all out-performing their respective markets. Despite the fall in food price inflation, Asda said it saw volumes accelerate over the same period as it continued to win customers.

McKenna said: “We’re pleased with these results as they demonstrate the ongoing health of our business. By continuing to be the lowest price retailer and by broadening our appeal, we’re attracting more customers, and increasing our sales volumes.”

Asda has opened 10 stores so far this year, which it said are all performing above expectations.

It said grocery sales via are “growing rapidly”, supported by the launch of a new web platform developed jointly by Asda and Wal-Mart. It has also opened its home shopping centre in Morley in Leeds.

It said Asda Direct continues to grow strongly, and customer satisfaction levels are “extremely high”.

McKenna said: “Customers continue to be somewhat cautious, with many people choosing to use any extra money they have to pay down debt and save more. This is not going to be a straight line economic recovery, however, in this environment, we are well placed to continue gaining market share by giving customers what they want – great products at low prices.”