Asda, the British arm of U.S. retailer Wal-Mart, posted a slowdown in sales growth in the fourth quarter of its financial year, as shoppers were squeezed by rising prices and muted wages growth and grew worried about the grim economic outlook.

Britain's second-biggest supermarket chain behind Tesco said on Tuesday sales at stores open over a year, excluding fuel and VAT sales tax, rose 1 percent in the 14 weeks to January 7.

That followed a 1.3 percent increase in the third quarter.

(Reporting by James Davey and Mark Potter; Editing by David Holmes)