British supermarket chain Morrisons has held its full year outlook despite a like-for-like sales drop in the first quarter (Reuters)

Morrisons, Britain's fourth largest supermarket chain, said its like-for-like sales fell in the first quarter of the year because of the challenging consumer market, though it said performance was broadly in line with expectations and held its full-year outlook.

The supermarket blamed high food and oil prices for hurting consumers. It also faces tough market competition with price-slashing rivals Tesco, Asda and Sainsbury's, who are locked in a price war to attract financially hard-pressed customers into their stores.

"As expected, the economic environment for the consumer has remained challenging, with the high price of oil and other commodity prices putting pressure on disposable incomes," said a statement from the supermarket.

Total first quarter sales were up 1.5 percent excluding fuel (3.1 percent including).

However like-for-like sales excluding fuel dropped 1 percent (up 0.9 percent including).Morrisons said its financial position "remains strong" and that although the board is cautious over the difficult economic background it is leaving its outlook for the year unchanged.

Britiain is in a recession, according to the Office for National Statistics (ONS), after two consecutive quarters of GDP contraction.

In the last quarter of 2011 GDP drew back 0.3 percent, and in the first quarter it contracted 0.2 percent, the ONS reported.

This may dampen consumer confidence and cause caution over spending, creating an even more challenging situation for struggling retailers.

London-listed Morrisons stock was up 0.9 percent on the day to 282.5 at 0843 GMT.