While the grocer has consistently seen its lead as top supermarket diminish, the pace at which its sales have weakened has slowed this quarter.
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"Tesco is yet to see substantial improvement, however it seems it may be turning a corner as sales are down 3.6 percent, which is the grocer's best figure posted since June," head of retail and consumer insight at Kantar Worldpanel, Fraser McKevitt said.
The troubled grocer is facing one of the biggest crises in its history after the discovery of a £250 million ($404 million) accounting black hole, which has led to the suspension of eight senior employees.
The group is set to reveal its half-year results on Thursday, which were delayed following news of the accounting scandal. Investors are also expecting an update on Tesco's internal investigation into the accounting failure.
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As well as the internal investigation, the U.K. regulator, the Financial Conduct Authority, the Serious Fraud Office and the accounting watchdog, the Financial Reporting Council have also launched investigations into Tesco's finances.
The supermarket's share price has plunged over 45 percent so far this year as a result of the scandal, with main shareholders Warren Buffett and asset manager BlackRock slashing their holdings in the group.
Data from Kantar Worldpanel showed like-for-like grocery prices for the 12 weeks ending 12 October have declined by 0.2 percent, pushing the grocery market into deflation.
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"While the supermarkets are battling it out on price, the real winners are consumers. Extensive price cutting by some supermarkets in a bid to win the price war means that customers are saving on everyday items such as vegetables and milk," McKevitt said.
Luxury supermarket Waitrose saw record growth, while discount chains Aldi and Lidl also posted a strong increase in market share.