The Co-operative Group has posted robust first half sales growth, but is bracing itself for “fiercer” competition in the convenience sector as food inflation continues to hit customer spending power.

Food like-for-like sales grew 3.5% in the half-year to 1 July – 1.5% ahead of the market – which continued a trend that has seen 14 successive quarters of like-for-like growth.

Convenience store like-for-like sales were even higher – up 4.5% as the mutual continued its focus on convenience retailing.

But in its interim report, the group said it saw inflation continuing to impact on consumers’ spending power and expects competition in the convenience sector to become fiercer. “Our focus will remain on making the shopping experience for our members and customers even better.”

The Co-op said it would continue to look for opportunities to extend its reach across the UK through franchise arrangement following its deal in May to pilot seven new franchise convenience stores with independent petrol service station operator MRH.

These trial stores had performed strongly with sales up by more than 50%, it said.

The first half saw the Co-op open 34 new food stores, putting it on track to hit its target of 100 by the end of this year.

It continued to invest in its products and further strengthened its focus on quality as part of its retail strategy, with its newly relaunched Irresistible range up 22% in like-for-like sales in the first half, the society reported.

Group pre-tax profit climbed 47% from £17m to £25m, which reflected several one-offs and non-trading items. Group revenues were stable at £4.6bn.

Allan Leighton, group chairman, said: “During the first half of the year we made an emphatic return to our historic mission to be a leader in ethical commerce and a campaigner on the issues that matter to our members.”

The group’s goal now was to grow its profits so it could develop membership further, make more people aware of its difference and deepen the relationship with its members and their communities.

Steve Murrells, chief executive, said unlike the same period a year ago, the group was now giving back millions - £29m in the first half of the year through its “5% for you” reward – to its members “by putting money into their pockets, rewarding them for their continued support, and strengthening the communities in which they live.”

He said £5m had been earned for local causes through the “1% for your community” reward. “We are also campaigning on the causes that matter to them most,” Murrells said.