UK supermarket Sainsbury's today reported a 9% fall in first half profit and a slowdown in quarterly sales growth as intense competition in the grocery market took its toll. 

Sainsbury's did, however, say it had exceeded its cost savings target and forecast profits for the full 2017-18 year would be in line with the current market consensus.

Sainsbury's and major UK rivals - Tesco, Asda and Morrisons - are grappling with the rapid growth of discounters Aldi and Lidl. 

They also have to cope with more expensive food imports due to a fall in the value of sterling since Britain voted to leave the European Union. 

British consumer spending is also under pressure from rising inflation, subdued wage growth and ongoing uncertainty in the UK economy. 

Sainsbury's, which acquired electrical goods retailer Argos in September 2016, said it made an underlying pretax profit of £251m in the 28 weeks to September 23.

This was ahead of analysts' average forecast of £241m but down from £277m made in the same time last year. 

The outcome reflected efforts to keep prices low despite rising inflation, higher staff wages and inclusion of the seasonally loss-making Argos business in the results, partly offset by synergies and cost savings. 

Second quarter retail like-for-like sales rose 0.6%, excluding fuel - a slowdown from growth of 2.3% in the first quarter.

Sainsbury's chief executive Mike Coupe said the group will have 165 Argos stores open in Sainsbury's supermarkets by Christmas and was on track to deliver £160m of synergy benefits from the acquisition six months ahead of schedule. 

Sainsbury's had also exceeded its cost savings target and would deliver £540m over three years ending 2017-18. At least a further £500m is targeted over three years from 2018-19. 

"While the market remains competitive, we are well placed to navigate the external environment and we remain focused on delivering our strategy," said Coupe. 

Before today's update analysts' average forecast for 2017-18 pretax profit was £572m, down from £581m in 2016-17.