Tesco is blaming the introduction of the local property tax as sales at its Irish stores continued to slump

The supermarket giant said sales fell 3% in the 13 weeks to May 25. That’s quicker than sales dropped during the same period in 2012.

In a statement this morning, Tesco said consumers continue to exercise caution in their shopping habits because of tough economic conditions.

“The impact of these external pressures increased in Ireland, with a significant reduction in consumer sentiment and spending following the announced introduction of a local property tax on residential properties,” it added.

Tesco has also been hurt by the increasing popularity of discount supermarket chains. According to the most recent grocery market share figures, Tesco is losing out to the likes of Aldi and Lidl. They added more than 100,000 customers in the last three months, the Kantar World Panel data shows.

Tesco is also suffering in its home market in the UK. The world’s third-biggest supermarket group has been forced to spend about €1.7 billion revamping stores and adding more staff to attract customers back to the tills. That appears to have little effect with sales, excluding those from new and expanded shops, down 1% over the quarter.

The Tesco boss Philip Clarke, though, was upbeat about the performance. 

“We have started the year on track, despite a continued difficult economic environment for consumers,’ he said.

The company added that there has been a fall-off in sales of chilled and frozen food since the horsemeat scandal earlier in the year.

Shares in Tesco fell nearly 4% on the London Stock Exchange this morning.