Tesco and Marks & Spencer both saw strong trading over Christmas as higher prices boosted their sales.
Tesco said like-for-like sales at its UK stores rose by 5.3% while M&S’s grew by 7.2%.
The UK’s largest supermarket said there had been strong demand for its budget items though shoppers had also been treating themselves to Tesco’s Finest range.
Meanwhile, M&S said it had performed well across food, clothing and home.
While Tesco reported a rise in sales for the 19 weeks to 7 January, growth was driven by the pace of rising prices – or inflation – rather than people buying more items.
Tesco chief executive Ken Murphy admitted that the volume of goods sold was marginally lower than the same period last year. But he said the UK consumer “has proved quite resilient”.
The cost of living is rising at its fastest pace in 40 years, putting pressure on household budgets.
This week, industry body the British Retail Consortium rather than people buying more.
Tesco said it had seen “strong” Christmas trading as it offered more deals to fend off competition from discount rivals Aldi and Lidl.
The retailer said this growth included “particular strength” in fresh food, with 8.1% growth, as shoppers continued to spend on essentials.
The group also highlighted a 7.4% increase in sales by volume of its low everyday prices range after launching a “price lock” commitment on these products in October
Looking ahead Mr Murphy said Tesco hoped that inflation would peak towards the middle of the year. “We think and hope we will start to see inflation come off in the second half of the year,” he said.
Marks & Spencer saw a 6.3% rise in like-for-like sales across its food halls in the 13 weeks to 31 December, seeing record Christmas sales of more than £80m on 23 December.
The retailer, which is seen as a bellwether of the UK High Street, saw clothing and home comparable store sales rise by almost 9%.
But the group said it was continuing to focus on restructuring its business and cutting costs in the face of soaring inflation.
The group is looking to make savings of about £150m in the next few years to offset soaring prices and help it weather tougher trading.
Christmas winners and losers
A host of other companies provided updates to investors on Thursday morning including:
- Asos: The online fashion retailer said group sales dropped 3% in the four months to the end of December. In the UK, sales fell more sharply by 8%, which Asos blamed on delivery disruption and falling consumer spending.
- Halfords: The cycling and car parts retailer cut its annual profit forecast, citing weaker customer demand as prices soar. It now expects full-year profits before tax to come in at £50-60m, compared with a previous forecast of £65-75m. It also said it had struggled to recruit enough skilled technicians.
- Mitchells & Butlers: The pub and restaurant chain saw strong Christmas trading, with like-for-like sales, which strip out the effect of new pub openings, up 19% in the five weeks to 5 January. It said, however, that part of the boost was down to food and drink sales being subdued before due to the Omicron variant. Its boss also said it was conscious of rising costs hampering customer spending.
- Whitbread: The Premier Inn owner had strong third-quarter sales, helped by demand for accommodation in the UK and higher room rates as people got away for the first Christmas since pandemic curbs were lifted. It reported a 23% jump in total sales for the 13 weeks to 1 December, compared with a year ago. Budget hotels in particular are performing well, it added.