Andy Clarke stated that there isn’t any evidence which suggests that there can be seen an upturn in consumer confidence. Independent figures which will be released later this week on behalf of Asda by the Centre for Economics and Business Research might show that UK households were nine pounds a week worse off in January than they were in the previous year compared to eight pounds poorer in the month of December.

Mr. Clarke further stated that due to rising taxes, price inflation and ongoing concerns over job cuts there are dents seen in household budgets. He stated that he could not expect consumer confidence to go up when there are so many challenges which will be faced by the British public in the few months ahead. He went on to say that he can’t see any chances of improvements

If interest rates are increased then there will be further dent in spending habits. It will create more pressure on their spending power.

Asda said further that it is witnessing signs that customers are saving and scrimping all across its business. It has cited an example saying that it has seen an increase in round figure filling when shoppers put petrol in their cars. This means that they are buying enough petrol to meet a pre-fixed limit but no more, a classic sign of hard times.

The warning over the consumer economy came after Asda said that sales over the last three months of 2010 had improved. The supermarket further stated that its fourth-quarter sales rose by 1.6pc, excluding fuel and VAT.

If the full year is taken into account then like-for-like sales went up by 0.6pc using the same metric. The firm said that it is growing faster than the rest of the grocery market. Asda employees will receive a bonus pot of £26.9m.