The UK’s biggest retailer, Tesco, has said that confidence is beginning to return to shoppers after it reported “strong” sales growth.

The supermarket reported an increase in UK sales of nearly 5% in the past three months, saying shoppers were putting more in their baskets and switching to Tesco from competitors.

It saw strong sales in its premium food range, claiming consumers are opting to dine-in more.

Tesco chief executive Ken Murphy has come under fire for his £10m pay package last year, but the company defended the figure at its annual general meeting.

Tesco chairman Gerry Murphy said he had “no difficulty in defending Ken’s absolute level of pay”.

“We do recruit from time to time at very senior levels from the global market and frankly we just have to be competitive with that market,” he added.

Before the AGM, Ken Murphy had told reporters: “I absolutely accept that I’m well paid.”

According to the pressure group ShareAction, the Tesco CEO’s salary is 430 times more than the average Tesco employee.

Tesco said there had been a “gentle” improvement in consumer sentiment and it was hoping for a boost from a summer of sport, with the Euro 2024 football tournament about to begin.

The retailer is planning for strong demand on match days and has observed an uptick in consumer confidence and positivity going into summer.

Sales of its premium “Finest” food range had been particularly strong, Tesco said, rising by 12.5%.

“We’ve continued to build momentum in the business, with strong volume growth across the UK, Republic of Ireland and Central Europe supported by easing inflation,” Ken Murphy said.

“Our market share reflects this, growing more than at any other time in the past two years, with customers switching to us from other retailers, shopping with us more often and with more in their baskets.”