The UK’s listed retailers all posted bumper Christmas sales updates this week as soaring food price inflation and solid sales volumes combined to accelerate growth rates.

Sainsbury’s upped its profit expectations for the year on Wednesday, after grocery sales rose 7.1% year on year to drive a record Christmas. Argos also boosted sales by 7.1% in the six weeks to 7 January and clothing sales rose 5.1%.

Total like-for-sales across the third quarter jumped 5.9%, which it put down to higher prices alongside “relatively resilient volume trends”.

Meanwhile, on Thursday Tesco said group retail sales were up 7.9% in the six weeks to 7 January, with UK like-for-like sales up 7.2% in the period. This sales rise was driven by its “most competitive offering to date” and its “focus on value and quality”, while It saw particular strength in fresh food (up 8.1%) and strong availability.

Finally, on Thursday Marks & Spencer posted near-10% growth in group sales over the third quarter covering Christmas, driven by bumper growth in food and clothing. Food sales increased 10.2% with like-for-like sales up 6.3%, thanks to sales outperforming the market in both value and volume, according to the retailer. Clothing and home sales increased 8.8% with like-for-like sales up 8.6% and “well ahead” of the market.

While all three performances were welcomed, shares reacted modestly. Sainsbury’s ended Wednesday down 1.6% to 241.9p, while Tesco was up 1% by Thursday lunchtime to 246p and M&S by 0.1% to 143.5p, having both opened down.

Some of the strong performance had already been reflected in shares after market share data pointed to impressive trading – with Sainsbury’s up almost 12% so far in 2023, for example.

However, AJ Bell noted the results should be seen in the context of a brutal environment for UK grocers, commenting: “The UK supermarket sector remains cut-throat so Tesco’s ability to protect and even build on its market-leading position is impressive. However, with sales growth running behind inflation, it seems Tesco has had to indulge in heavy discounting to fight off the challenge from the discount operators.”

Third Bridge noted similar pressures on Sainsbury’s: “Sainsbury’s is fighting a rearguard action to maintain its gross profit margins by carefully passing on extra costs to customers. However, every day that the cost of living crisis persists lends greater strength to the likes of Aldi and Lidl as their store numbers grow and the stigma of using discounters melts away.”

Overall, Shore Capital suggested Christmas trading numbers were proving something of a welcome surprise to the market. The broker noted: “Strong December value performance and robust overall retail share of spend gains means that December 2022 has largely worked out satisfactorily for the British grocery trade against low expectations… Near-term earnings expectations look sound, brighter times ahead?”