Supermarket giant Sainsbury's pledged to extend its price matching scheme as it revealed better-than-expected sales in the run-up to Christmas.

The third biggest grocer in the UK saw like-for-like sales excluding fuel grow 2.1% in the 14 weeks to January 7, with customer transactions in the week before Christmas increasing by 1.5 million to a record 26 million.

The group said its Brand Match scheme - a guarantee that if an identical basket of branded goods could be bought more cheaply in Asda or Tesco, a coupon will be given at the till for the difference - was a hit and will continue into 2012.

Sainsbury's, which opened its 1,000th store in the period, said revenues were driven by strong food sales, including £2 million of Taste the Difference turkeys, but general merchandise sales again grew at a faster rate than food.

The update comes after market research figures revealed Sainsbury's achieved its highest share of the market since March 2003 with 16.7%, while bigger rival Tesco lost share.

Tesco, the UK's biggest supermarket chain, triggered a price war in September with its Big Price Drop campaign and prompted Sainsbury's to introduce its Brand Match scheme and Asda to offer a guarantee to be 10% cheaper than rivals.

But there are fears that Tesco's campaign has failed to strike a chord with customers because it is funded by a reduction in Clubcard points and promotions.

Sainsbury's said its Taste the Difference range grew by 10% in the quarter, while its Basics range grew strongly, driven by "staple" ingredients.

The supermarket said a record number of customers used their Nectar cards, with £100 million-worth of points redeemed. General merchandise and clothing sales were boosted by the second range from celebrity fashion consultant Gok Wan, launched in November.

Chief executive Justin King said: "Consistent with trends over the past year, we expect customers to spend cautiously in 2012, particularly in the first few months as they tighten their belts post-Christmas." Sainsbury's shares were nearly 1% higher after the update.