Sainsbury’s has said early Christmas shopping and customers watching the World Cup at home helped increase sales over the key festive quarter despite pressure on shoppers from the rising cost of living.

The UK’s second largest supermarket chain said profits are on track to hit the top end of previous guidance following a “record” Christmas performance.

The retailer revealed that total sales, excluding fuel, grew by 5.2% over the 16 weeks to January 7, compared with the same period last year.

It said growth was buoyed by “inflation and relatively resilient volume trends”.

Sainsbury’s chief executive Simon Roberts said the retailer has witnessed inflation “well below” the 14.4% of grocery price inflation recorded across the sector by Kantar last month.

However, he highlighted that the company has nevertheless seen increases in labour costs, utilities and certain products such as dairy and eggs.

Like-for-like sales rose 5.9% over the quarter, with a 5.6% increase in grocery sales.

The group also revealed that general merchandise sales – which include trade through its Argos business and Tu clothing – were “stronger than expected”.

Sainsbury’s added that the quarter included a 7.1% increase over the latest six weeks amid a strong Christmas performance.

It told shareholders that profits for the year are now expected to be towards the “upper end” of its previously announced guidance of between £630 million and £690 million.

It highlighted that profits will be boosted by the firm’s finance costs, which are set to be £15 million lower than previously expected.

The improved profit guidance comes as supermarket margins come under pressure from soaring food inflation and efforts to keep a lid on price increases for customers.

In November, Sainsbury’s confirmed it will invest a further £50 million into pricing by March, taking overall investment to improving prices to £550 million.

Mr Roberts said: “We delivered the best possible Christmas for customers as millions of households managed their budgets differently, hosting larger gatherings again and treating themselves at home.

“Customers shopped early, buying Christmas treats and fizz more than once, and looked for deals, taking advantage of Black Friday and other seasonal offers.

“Argos offered great value and quality, and, as train and postal strikes disrupted the country, customers appreciated its reliability and convenience.

“Sales were also boosted by the World Cup as people celebrated more at home.”

Shore Capital’s Clive Black said the update was deemed to be “very good and encouraging” for the retailer.

Nevertheless, shares in Sainsbury’s were 1.7% lower at 241.5p in early trading on Wednesday.