Tesco has said consumers are in “reasonably good shape” as a surge in demand for premium products and food price cuts helped lift its sales.
The UK’s biggest supermarket said shoppers were buying more items than they were last year.
Total sales across the group grew by 4% to £31.5 billion over the 26 weeks to August 24, compared with the same period last year, incorporating both its food and home and clothing businesses.
An increase in the volume of purchases, particularly across fresh food, helped drive a 4.9% increase in food sales in the UK.
The retailer said it had been able to lower prices across about 2,850 everyday grocery products, by an average of 9%, as inflation continued to ease.
Shoppers across the UK grappled with bigger food bills last year as retailers faced higher costs from their suppliers, but inflation has dropped sharply in recent months.
It also credited an uptick in the number of purchases made using its Clubcard loyalty scheme, with more than 23 million households signed up across the UK.
Tesco also revealed a nearly 15% jump in the volume of sales of its Tesco Finest premium range, with more than 20 million customers shopping the range, with products such as sourdough bread proving particularly popular.
Ken Murphy, Tesco’s chief executive, said: “While they are not doing cartwheels down the hallway, customers are in reasonably good shape.
“You’re seeing a stability in sentiment from a grocer point of view.
“Also a willingness to spend a little bit more, to treat themselves, and you see that reflected in our Finest sales growth.”
Tesco Finest Dine In sales grew by 18% over the period, which Mr Murphy suggested could partly reflect a trend of people choosing to eat at home rather than dining out.
The boss also said it was seeing consumer sentiment improve ahead of the festive period, and is expecting more people to “aim for a special and fun-filled Christmas” this year.
Meanwhile, Tesco reported an adjusted operating profit of £1.6 billion for the first half of the year, about 16% higher than this time last year.
With volume growth ahead of its expectations this year, the group said it now expects to deliver an operating profit of £2.9 billion for 2024.
It previously said earnings were likely to come in at at least £2.8 billion.
The retailer made about £260 million worth of cost savings over the first half of the year, which it said came from things like making its store operations more efficient, and reducing the amount of stock that gets lost or wasted.
Tesco said it has a 27.8% share of the wider grocery market, its highest level since the start of 2022, making it the country’s biggest supermarket.
