Growth at Asda slowed from 7.2% to 5.6% in the three months to 30 September - but remains ahead of its supermarket rivals'.
In a quarterly update, chief finance officer Judith McKenna said the slowdown was largely due to a drop-off in food price inflation.
However, Asda continues to outpace its big-four rivals. In recent updates, Tesco reported 3.1% underlying sales growth, while Sainsbury’s earlier this week unveiled a 5.4% rise in sales.
McKenna said Asda planned to invest £150m in price promotions for the festive season.
“Having gone through what they've gone through over the past year people are reluctant to spend cash,” she said, warning of a difficult Christmas for UK retailers. “They would rather pay off debt.”
Profits soar at Sainsbury’s (11 November 2009)
Mults’ growth at slowest since 2007 (11 November 2009)
Tesco regains initiative with strong September (14 October 2009)