Sainsbury's has announced a five per cent pay increase for its 118,000 hourly-paid workers following what it described as its "biggest ever Christmas", with the raise to be implemented in two stages to manage inflation pressures.

The UK's second-largest supermarket chain will increase hourly pay from £12 to £12.45 in March, followed by a further rise to £12.60 in August. London-based workers will see their pay rise from £13.15 to £13.70 in March, and then to £13.85 in August. This means the minimum annual salary for a full-time colleague outside London will increase from £22,882 to £24,026 by August 2025.

The pay announcement comes as Sainsbury's reported strong performance over the Christmas period, with grocery sales rising by 4.1 per cent in the 16 weeks to 4 January. The company saw record sales volumes in the days before Christmas, driven by strong demand for party food and champagne, though its Argos arm experienced a slight decline.

Simon Roberts, chief executive officer of Sainsbury's, said: "The strength of our customer service and operational performance stood us apart in delivering our biggest ever Christmas. Customers shopped later than ever and we achieved our highest ever sales in the final days before Christmas."

The trade union Usdaw welcomed the pay increase. General secretary Paddy Lillis said: "Our members are key workers in the business and it is only right they are fairly rewarded with a living wage."

The supermarket chain confirmed it is on track to meet its profit guidance for the year, with retail underlying operating profits expected to be towards the middle of its £1.01 billion to £1.06 billion range, representing growth of around seven per cent.

The pay increase exceeds the national minimum wage rise planned for April 2025, when the government will increase the rate by 6.7 per cent to £12.21 per hour for workers over 21 years of age.

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