LONDON, Sept 17 (Reuters) - British supermarket group

Morrisons on Wednesday reported a slowdown in underlying sales

growth in its third quarter, highlighting "tough market

conditions".

The UK's fifth-largest grocer, owned by U.S. private equity

firm Clayton, Dubilier & Rice since 2021, said its like-for-like

sales rose 3.0% in the 13 weeks to July 27, compared with a rise

of 3.9% in the previous quarter.

Morrisons, which trails industry leader Tesco ( TSCDF ),

Sainsbury's ( JSNSF ), Asda and discounter Aldi in UK market

share, cited quickening inflation and challenging economic

conditions.

Morrisons differs from its main rivals in that it also

has its own production operations. It makes half of the fresh

food it sells.

"Consumers are feeling the squeeze and we are continuing

to work hard to help our customers make the most of stretched

household budgets," Chief Executive Rami Baitiéh said.

He said Morrisons was also having to manage "significant

cost headwinds" from higher employer taxes introduced in the

government's budget last year as well as a new packaging levy.

However, Morrisons able to reduce its gross debt by a

further 261 million pounds in the period to 3.5 billion pounds

($4.77 billion), versus 6.2 billion pounds when CD&R acquired

the business.

($1 = 0.7332 pounds)