Wal-Mart, the world's biggest retailer, today said that many of its customers were forced to cease spending towards the end of each month as high fuel and food costs left Americans penniless in the run up to pay-day.

Eduardo Castro-Wright, head of Wal-Mart's US store division, said: "The economy continues to get tougher and the ’paycheck cycle’ is more pronounced for customers than in past months. As money gets tighter for them toward the end of the month, sales drop more than we have seen in the past.”

He explained that increasingly Wal-Mart customers were trading down and buying cheaper cuts of meat and more pasta to feed themselves.

Despite the squeeze, Wal-Mart unveiled better than expected like-for-like US sales in April, up 3.2 per cent, beating Wall Street expectations of a 2.1 per cent rise for the month. The retailer, which also owns Asda, said sales for the month rose to $29.18 billion, compared with $26.57 billion for the same period the year before. Sam's Club, the wholesale division of Wal-Mart, benefited from a 6.6 percent rise in like for like sales over the period. The wholesale business - which sells to restaurants and hotels - last week began rationing long grain rice to avoid hoarding among customers who were trying to offset the risk that grain prices would continue to rise.

At the same time, however, Target - the discount retail group - missed Wall Street expectations as they warned that shoppers were avoiding higher margin items such as clothes, buying essentials such as detergent. During April, like for like sales rose 3.1 per cent, below expectations. Shares in the group slipped 1 per cent. Total sales for the four weeks ended May 3 increased 9 per cent to $4.25 billion.

Americans are trying to cope with soaring food and energy prices and tightening credit conditions as the world's largest economy slides into a recession and house prices continue to decline. Target said earlier today that its shoppers were increasingly avoiding new purchases for DIY and home improvement, conserving cash for essential items.

More worryingly, McDonald's - the world's biggest fast food chain - said that like for like sales in April rose just 2 per cent across the US. The burger group typically benefits during an economic slowdown as Americans trade down when they choose to eat out. Some analysts are expecting sales in the US to improve later this year, after it sought to undercut more expensive coffee sellers with cheaper drinks.

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