Sainsbury’s has reported a deceleration in sales growth amid ongoing economic uncertainty linked to the conflict in Iran and cautious consumer spending. For the 16 weeks ending June 20, the UK’s second-largest supermarket chain recorded a 2.1 percent increase in like-for-like sales, excluding fuel, reaching £9.2 billion. This represents a decline from the 3.1 percent growth seen in the previous quarter, reflecting a continued trend of slowing momentum for the retailer.

The group’s general merchandise arm, Argos, saw a 0.5 percent decline in sales to £1.1 billion despite an increase in the volume of items sold. Sainsbury’s attributed this underperformance to “subdued consumer spending.” Within the core Sainsbury’s brand, sales of clothing and general merchandise dropped by 3.7 percent, which offset gains in the grocery division.

Chief Executive Simon Roberts cited the ongoing war in the Middle East as a factor impacting household budgets through higher energy prices and rising everyday costs. He noted the potential for further inflationary pressure but expressed hope that any increases would be less severe than previously anticipated.

The performance figures come shortly after Tesco, the UK’s largest supermarket chain, reported its own slowdown, with sales growth of 1.8 percent in the three months ending May 31. Earlier in April, Sainsbury’s warned that the conflict in Iran would negatively affect profits by weighing on consumer spending patterns.

Despite acknowledging the uncertainty surrounding the broader impact of the war on both customers and business operations, Sainsbury’s reiterated its financial guidance. The company expects operating profits to range between £975 million and £1.1 billion for the current period.

Roberts also commented on the political landscape, expressing hope that the incoming government—anticipated to be led by Labour’s Andy Burnham following Sir Keir Starmer’s anticipated departure—would implement measures to support consumer confidence. Key policies highlighted include reductions in levies and energy costs, which Roberts identified as important factors for household and business affordability.

Following the release of the results, Sainsbury’s shares closed up 1.3 percent at 319.8 pence.