Sainsbury's announces inflation-busting pay rise for 118,000 staff after record Christmas sales

The UK's second-largest grocery chain, trailing only Tesco, reported robust sales over the festive period, with party food and bottles of fizz in high demand

Sainsbury's, the supermarket giant, has announced a 5% wage increase for its staff following a record-breaking Christmas season.

The UK's second-largest grocery chain, trailing only Tesco, reported robust sales over the festive period, with party food and bottles of fizz in high demand. Consequently, it informed shareholders on Friday that it is set to meet its annual profit targets.

Sainsbury’s also revealed plans to award its staff a 5% pay rise in 2025 to help them cope with the "particularly tough cost inflation environment". This pay hike will impact 118,000 hourly-paid employees, raising the minimum yearly salary for a full-time worker outside London from £22,882 to £24,026 by August.

Hourly wages for Sainsbury’s and Argos workers will rise from £12 to £12.45 in March, before another increase to £12.60 in August. As of November 2024, the UK inflation rate was 2.6%. This is up from 2.3% in October 2024,

London-based employees will see their pay go up from £13.15 to £13.70 in March, followed by another raise to £13.85 in August. This comes ahead of the Government's planned national minimum wage increase in April, which will see a 6.7% rise to at least £12.21 per hour for workers aged 21 and above.

Sainsbury’s new pay deal coincides with a surge in sales over the last quarter. The retail titan reported a 2.7% increase in overall group sales, excluding fuel, for the 16 weeks leading up to January 4, driven by strong performance in its grocery business.

Grocery sales at the company surged by 4.1% in the recent period, with the brand carving out an even larger slice of the UK grocery market pie. A record-breaking shopping spree just before Christmas saw customers delaying their festive purchases more than usual.

The business witnessed a nearly 40% surge in party food sales, which helped balance a dip in returns from its Argos division. This has put the company on a clear path to hit its expected profit figures for the year, as it advised investors that predicted retail underlying operating profits will likely sit comfortably in the middle of the £1.01bn to £1.06bn forecast range.

Sainsbury's chief executive, Simon Roberts, commented: "Driven by our leading combination of quality, value and service, we have achieved seven consecutive quarters of volume performance ahead of the market and further accelerated our two-year volume growth.

"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."