An uncertain inflation and spending outlook weighed on Tesco and M&S shares.

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Inflation and uncertainty over price increases weighed on the major retailer’s shares, despite Tesco reporting its “biggest Christmas ever” and food sales beating M&S, with growth of nearly 9 per cent over the festive period.

TescoLike-for-like sales rose 3.1 percent from the 19th week to Jan. 4, helping it gain its highest market share since 2016, up from 28.5 percent, according to industry data from Kantar. The premium segment of the market performed strongly during the period, with sales up 15.5 percent.

Tesco chief executive Ken Murphy said: “What we have said is ‘there will be no inflation’. The UK’s top retailer kept its full-year guidance on retail-adjusted operating profit of £2.9 billion, adding: “What we are saying is, we will do everything we can to mitigate the impact.”

After October’s budget, it confirmed it would be hit by £250mn a year from extra National Insurance costs, but Tesco said it would work hard not to pass on inflation to shoppers.

Shares were down 2.7 per cent at 359p in morning trading.

Murphy said consumer sentiment was “balanced” despite expecting shoppers to focus more on value after Christmas spending in January.

M&S Shares fell 6.4 per cent to 352p. The company’s outlook for the coming year is “uncertain” as the business faces higher costs than on record. Tax increaseHe said.

Although this beat expectations for food sales, which rose 9 percent in the 13 weeks to December 28, analysts had expected growth of less than 8 percent.

“Sales records were broken across the business, with clothing, home and beauty recording its biggest week online,” said chief executive Stuart Machin. at M&S”.