Tesco Ireland said that sales during the key Christmas trading period rose by 4% on a like-for-like basis compared to 2016. Strong inflation, weak wage growth - leads to eroding household savings and disposable income for consumers.
However, the supermarket giant said the collapse of Palmer & Harvey did impact tobacco sales during the period.
Tesco had been tipped to outperform the rest of the big four in the third quarter, but that title appears to have been taken by Morrisons, which posted like-for-like sales rises of 3.7 per cent earlier in the week.
Lidl has claimed it was the "fastest growing supermarket" over Christmas after booking record festive sales.
Supermarkets Morrisons and Sainsbury's also suffered in the wake of the slump, drifting down 3.3p to 226.2p and 5.3p to 248.6p respectively.
"As a result, we carried more stock into the December sale", said CEO Steve Rowe.
A profit upgrade from Next and contrasting earnings alert from Debenhams last week set the scene for a mixed performance and the latest clutch of sales reports show it was by no means a jolly Christmas for all.
But an unseasonably mild October had resulted in an overall revenue decline for the quarter, while online sales also suffered, with growth slowing to 3%, from 6% in the previous quarter.
The retailer hailed a "strong" third-quarter performance in the United Kingdom and Republic of Ireland, with United Kingdom like-for-like sales up 2.3% in the period and 1.9% over the Christmas trading season.
Rowe added changes were underway at the retailer to "get the business back on track" this year. "Price investment before Christmas and a strong performance from seasonal lines helped late trading".
Despite the sales disappointment M&S said it would maintain its financial guidance for the full 2017-18 year.
While inflationary pressures remained a problem for many United Kingdom food firms, Tesco said it had continued to work with its supplier partners to help mitigate the impact on its customers.
"In the Christmas week itself (.) we sold more food than ever before at Tesco as we made our offer the most competitive it's been for many, many years", he told reporters.