Sainsbury’s has reported a 4.7% rise in pre-tax profits in its H1 results although the supermarket also warned that it may be raising food prices following last week’s Budget.

The retailer’s underlying profit before tax hit £356m in the six months to 14 September, bolstered by 5% growth in grocery sales.

However, Sainsbury’s has indicated it will need to pay £140m more next year in national insurance contributions as a result of Rachel Reeves’s tax hikes in her Budget last week, which may potentially lead to higher food prices.

The group has still maintained its annual profit outlook of around £1bn, which would represent an annual increase of between 5-10%.

Sainsbury’s chief executive, Simon Roberts, said that the supermarket’s grocery volume growth had delivered “strong profit leverage”.

“With strong momentum and increasing confidence in the strength of our grocery offer, we’re now investing to bring the best of Sainsbury's to more people in more locations,” he added.

In the supermarket’s non-food business, however, Sainsbury’s reported a series of declines of 1.5% in clothing sales, 4.4% in fuel sales, and 5% in its Argos business.

Investment director at AJ Bell, Russ Mould, commented that after a troublesome first quarter for Sainsbury’s non-food operations, the company is “walking on a tightrope rather than sprinting on the field”.

“While Argos, general merchandise and clothing all had a terrible start to Sainsbury’s financial year, the tide is slowly turning,” he added. “Argos is still the odd one out with negative sales, but the rate of decline has slowed considerably from the previous quarter.

“Sainsbury’s now needs to focus on a big push for the festive season, ensuring its supermarkets are the place where shoppers order their Christmas turkey and bubbly, and Argos is where they pick up toys for the children. It’s a highly competitive market but Sainsbury’s is in a much stronger position to compete than five or 10 years ago.”

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