By Greg Wright

Published 12th Jan 2023, 08:09 BST

The UK’s largest supermarket group revealed that group like-for-like sales, excluding fuel, grew by 7.9 per cent over the six weeks to January 7, compared with the same period last year.

It said this came after 5.7 per cent growth over the quarter to November 26.

The retailer said this growth included “particular strength” in fresh food, with 8.1 per cent growth, as shoppers continued to spend on essentials amid pressure on household budgets.

Tesco has delivered “strong” Christmas trading as it said it was boosted by investment to improve value as it sought to fend off competition from discount rivals Aldi and Lidl.

Ken Murphy, chief executive of Tesco, said: “I’m really pleased with our performance over this period – particularly the further strong growth at Christmas on top of the exceptional growth of the last few years.

“We’ve delivered a strong market share performance in the UK and ROI, Booker has continued to grow strongly despite a particularly tough catering backdrop and our central European business has delivered its highest sales growth for many years.

“I’m extremely proud of the way Tesco has stepped forward to help customers dealing with tough times this Christmas.

“By delivering relentlessly on the strategic priorities that we set out 18 months ago, we have made sure that customers know that they will benefit from great value and quality in every part of their basket, however they choose to shop with us.”

Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown, said:

“Tesco has followed in Sainsbury’s footsteps to record an exceptional set of results over the Christmas and third quarter period.

"The group’s dominant market share has also helped keep tills ringing, despite the growing pressure on household incomes, and the unstoppable rise of the discount supermarkets.

"The other string to Tesco’s bow is wholesaler Booker, which offers a diverse source of income...as catering trends normalise, the group’s benefitting from the wheels of hospitality turning once more.

She added: “For all the progress, there is an elephant in the room. A large proportion of success is coming down to discounting.

"Things like Aldi Price Match and price freezes are very successful tactics, but can spell bad news for margins.

"Supermarkets had only recently rediscovered their footing before the pandemic, following years of margin degradation from an all-out price war. Soaring inflation and the pressure on customer spending power means history is repeating itself.

"The tug of war between pricing and volumes is clearly producing a good result, which is why profit expectations have been reiterated, but it’s still hardly an ideal state of affairs for the big names in industry.

"The major question now is how supermarket spending will hold up from here. It seems people spent big at Christmas, but this may well mean a pull back in essential spending in the short to medium term. "

Tesco delivers bumper Christmas sales as customers face budget squeeze