J Sainsbury revealed yesterday that it had hit back in the battle for the bargain shopper, shrugging off competition from cut-price rivals such as Aldi and Lidl to announce a 30 per cent jump in sales of its budget range.

Driven in part by the “Feed your family for a fiver” campaign featuring Jamie Oliver, the celebrity chef, Sainsbury's recorded a like-for-like sales increase, excluding petrol, of 4.3 per cent for the 16 weeks to October 4, up from 3.4 per cent last year.

Moreover, according to Justin King, the chief executive, the biggest draw for the former bastion of middle-class shopping had proved to be its Basics range and its own brands. Sainsbury's own brands now account for more than half of the chain's sales.

“We've been allowing customers to change their shopping within Sainsbury's, rather than having to go outside,” Mr King said, adding that the strategy had been tested in the “heat of battle” - a reference to the increasingly tough competition on the high street, driven by a tightening economy and the rise of the value chains.

As sales of the Basics range rose 30 per cent in the quarter, the supermarket's “switch and save” advertising campaign, which aims to lure customers to own-label goods from branded labels, added 20 per cent to sales of featured products. Takeaway-style ready meals soared by 50 per cent.

“The economic environment remains particularly challenging and we expect this to continue throughout the second half,” Mr King said. He believed, however, that the greater range of goods on offer in the stores would help the company to perform satisfactorily in such conditions.

The increase in like-for-like sales was at the top end of analysts' expectations, but shares in Sainsbury's struggled yesterday as the market reacted to the sale by Robert Tchenguiz, the entrepreneur, of his stake in the company. The shares closed down 47p, or 15 per cent, at 299p.

Analysts remained unconvinced by the company's statement, pointing to the effects of food price inflation on increased sales, which may have masked static or decreasing volumes.Analysts also forecast that all retailers would struggle to avoid heavy discounting in the run-up to Christmas.

The fight for a share of Britain's weekly food shop is growing steadily more competitive. Tesco has already branded itself as “Britain's biggest discounter” and Sainsbury's, perceived as the most upmarket of the “big four” supermarkets, faces competition from Asda - which recently took over Sainsbury's position as the second-largest grocer - and Morrisons. The heavy discounters, such as Aldi, Lidl and Netto, are also expanding their market shares rapidly. Together, they account for about 6 per cent of sales, but are reporting double-digit growth figures.

A report by Caci, the location consultants, found that £11 billion of Sainsbury's sales came from areas that are yet to face direct competition from Asda and Lidl, prompting speculation that it is more vulnerable to the discounters than Asda or Morrisons.

Alastair Johnston, an analyst at JPMorgan, said: “We are unsure whether this trading momentum will be sustained. In particular, we think that Sainsbury's has been more promotional across the first half than its competitors and will suffer as Morrisons, Asda and Tesco step up price and promotion activity into Christmas.”

Justin Scarborough, of RBS, said: “Sainsbury's sales have not fallen off a cliff, as some have been suggesting, and we believe that its second-quarter sales performance demonstrates how much it has improved its offer and price perception over recent years.”

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