J. P Morgan’s latest review of UK grocery sales shows that the festive surge failed to lift earnings expectations. While Tesco and Sainsbury’s posted headline growth, the gains stemmed mainly from price adjustments and product mix, not a surge in underlying demand.

Analysts described the volume trend as solid but unspectacular, noting that the market had already priced in a strong Christmas season. Competitive pressure remains fierce, with supermarkets racing on price in core food categories, squeezing margins. Promotional intensity stayed high, limiting any margin upside even as volumes steadied. The update confirmed that Tesco’s performance matched forecasts, and Sainsbury’s steady execution did not alter its medium‑term earnings outlook. Cost inflation and wage pressures continue to weigh on the sector as it heads into the new fiscal year.

Overall, the data reinforce J. P Morgan’s view that the grocery market is normalising earnings rather than accelerating, and that a single festive period is unlikely to trigger upgrades without a clear shift in pricing power or cost structure.