Supermarket giant Tesco gave its rivals more food for thought after revealing that it achieved another powerful sales performance over Christmas.
The UK's biggest supermarket chain said same-store sales excluding petrol transactions were 5.7 per cent higher in the seven weeks to January 7, up from 5.5 per cent in the previous three months and in line with City forecasts.
The improvement came despite better performances from Sainsbury's and Morrisons over the festive period.
Tesco said its premium Tesco Finest range sold particularly well, while it continued to benefit from non-food sales with home entertainment, electronics, clothing, toys and gifts performing strongly.
Total UK sales were 10.1 per cent higher including the impact of new stores, and this figure rose to 11.5 per cent once international sales were added in.
The more closely watched same-store figure was lower than the 6.7 per cent seen at the start of 2005, but reflects the resurgence of Sainsbury's, the early signs of recovery at Morrisons and the price-cutting tactics of second-placed chain Asda.
Unlike Sainsbury's, which recently posted growth of 5.2 per cent for Christmas, Tesco was up against testing comparatives with the same period a year earlier.
The firm said in a statement: "Tesco has delivered strong growth and record sales over the Christmas and New Year period."
Finance director Andrew Higginson said: "We are delighted that, with the fantastic performance we had last year, we have held on to those gains. To have remained the best performer of the top four is pretty pleasing."
Although consumers had been cautious in recent times, he said they had "treated themselves" over Christmas.
He added that once again the outlook was for a more cautious customer.
Responding to the threat posed by rivals like Asda lowering prices, he said: "It's more of the same - we've had this for years."
Tesco continued its drive to lower prices for customers, meaning prices were 1.5 per cent lower than last year - broadly the same as during the previous quarter. However, this figure included the impact of moderating petrol prices.
Investment bank Goldman Sachs claimed in a report last week that Asda had continued to succeed in undercutting Tesco on prices and had made the deepest price cuts in the supermarket sector during January.
It claimed Asda was at least two per cent cheaper than Tesco in areas such as drinks, pasta, prepared food and beauty products - although Tesco was still more competitive on cakes, cereals and fresh meat.
But some some City experts refused to be sated and expressed disappointment at the international sales increase of 16.1 per cent, which compared with a 23 per cent rise for the quarter to November 19.
Analyst Andrew Fowler, at Merrill Lynch, said there was "no surprisingly good news" outside the UK.
He believed currency changes only accounted for half of the slowing in international sales.
He said: "With space growth picking up, we'd say there's been a clear like-for-like slowdown."
More than half of Tesco's retail space is outside the UK, with over 100,000 staff employed in its international operations.
Analyst Jonathan Pritchard of Oriel Securities, who has a 'reduce' rating on the stock, described the food sales performance as just the fourth-best among the top grocers.
"They are showing good growth on growth and we should never be churlish of growth on growth.
"It's still very, very good trading, just not quite as exciting as the market was expecting."