The improvement in sales by Britain's third-biggest supermarket placed it close to Wm Morrison and Asda, which emerged as the big winners for the Christmas period, according to industry data released on Thursday by Nielsen, the market research group.

Sales at Morrisons climbed by 9.1 per cent in the 12 weeks to December 27, and those at Asda rose by 6.7 per cent. Both gained market share, Nielsen figures suggested. On Thursday Sainsbury's reported a 4.5 per cent increase in like-for-like sales over the holiday period, but said that sales of its premium Taste the Difference range had fallen slightly in the 13 weeks to December 27.

The surge in sales of its cheaper lines comes as Sainsbury's said that it would extend its Switch and Save campaign to its Basics range, in a sign of how Justin King, the chief executive, is responding to the economic downturn by beefing up the supermarket's value credentials. The drive has encouraged customers to buy own-label products instead of branded equivalents but so far had been restricted to mid-range labels.

The supermarket will also introduce Basics ranges into smaller stores. Mr King said that Sainsbury's was profiting from the combination of recession-inspired thrift and a “massive trend” towards home cooking that had boosted sales of basic ingredients, such as stewing lamb, sales of which increased threefold over last year.

Shares in J Sainsbury rose 6p, or nearly 2 per cent, to 328¾p on Thursday.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive