Sainsbury's today (12) forecasted full-year profit at the upper end of its guidance after shoppers spent more than expected on festive treats despite a deepening cost-of-living crisis.
Ahead of Christmas, European retailers worried the trading period could be the worst in at least a decade.
But Sainsbury's 5.9 per cent rise in underlying sales for the Christmas quarter, backed up industry data showing a record festive performance from Britain's grocers, who likely gained share of overall spend from non-food retailers.
British inflation at 10.7 per cent is among the highest in the developed world and consumer confidence close to record lows, but retailers that have reported so far have performed well.
Chief Executive Simon Roberts said UK households managed their budgets differently, hosting larger gatherings after two years of pandemic restrictions and treating themselves at home rather than going out.
"Customers shopped early, buying Christmas treats and fizz more than once and looked for deals, taking advantage of Black Friday and other seasonal offers," he said, highlighting record sales of Champagne and prosecco.
He said sales of technology products were strong in the run up to the soccer World Cup.
However, Roberts was cautious on the consumer backdrop as people face an even tighter squeeze on their finances in 2023, as taxes and mortgage rates rise and UK government support on household energy bills is scaled back.
"We understand money will be exceptionally tight this year particularly as many people wait for Christmas bills to land," he said.
