Sales from UK grocers are growing at an annual rate of 5%, as the market shrugs off the credit crunch gloom and the effect of the price discounting seen in August.

The latest TNS Worldpanel grocery market share figures, for the 12 weeks ending 4 November, also show that competition for the "big four" is as furious as ever.

While Tesco has still grown share over the last year from 31.1% to 31.5%, this growth of 0.4 share points has been gained in the teeth of strong competition from its three main rivals - Asda, Sainsbury's and Morrisons.

A year ago, the equivalent Tesco share increase was 1.1 share points, Tesco said.

"While Morrisons has seen its share shaved from 11.2% a year ago to 11.1% now, this hides the fact that we may be starting to see a turnaround in Morrisons' fortunes, based on the most recent trends," TNS said. The analysts added that Morrisons' share was 10.8% at the beginning of September.

"Once again there is a strong showing from Waitrose with share at record levels and history tells us this is likely to increase as Christmas approaches," TNS said.

Meanwhile, an Iceland recovery continued with 9% year-on-year growth, although the revival was driven by the stores' chilled and ambient aisles rather than frozen products.

"Naturally, these levels of competition are making life tough for other fascias with pressure on the share performance of Somerfield, Co-ops and Independents," TNS added.