The Co-operative Group has said that half-year sales surged higher on the back of “exceptional” food and wholesale trading after the pandemic drove grocery demand.

The business said total revenues increased by 7.6% to £5.8 billion for the 26 weeks to July 4.

It said food revenues increased by 5.2% to £3.9 billion for the period, with 9.9% like-for-like growth in the second quarter, after customers shopped closer to home and ate out less frequently during the lockdown.

The Co-Op said on Thursday that it now expects competition to “intensify” in the grocery sector, but believes it remains “well-positioned”.

It has resumed its store opening programme and made a commitment to invest £130 million in opening 50 stores, extending 15 stores and giving 100 further sites makeovers, creating 1,000 jobs before the end of the year.

The Nisa wholesale business the company bought in 2018 saw revenues jump by 13.9% to £801 million for the half-year, as it benefited from more people shopping locally at convenience stores.

Revenues from the group’s funeral operations also increased over the first half of the year, rising by 3.5% to £148 million.

It said a 22% increase in volumes was offset by a lower average revenue per funeral due to Covid-19 pricing restrictions.

The group said the pandemic had a total impact of £54 million on its half-year figures and expects this to rise to £97 million for the full year.

However, it saw underlying operating profit double to £121 million for the period, as it was buoyed by strong food trading.

The company also announced plans to increase its hourly pay rate for staff to be in line with the Real Living Wage, in a move which will see workers currently on around £9 per hour receive £9.50 per hour from next year.

Steve Murrells, chief executive of the Co-op, said the pay increase, which is expected to benefit around 33,000 staff, will cost around £20 million a year.

He told the PA news agency: “How we reinvest our profits is really important to us, so we believed we should pass this on to our staff in their pay packets.

“We want to make a meaningful contribution to bolster their finances at a time of uncertainty.”

The company also said it has outlined an “inclusion manifesto” to address diversity at the business, with it aiming to ensure that 10% of staff in leadership roles are from ethnic minority backgrounds by 2025.

Mr Murrells added: “We are living in unprecedented times, but the response of our Co-op has been exceptional and I’m immensely proud of my 60,000 colleagues who’ve helped to feed and care for the nation during this difficult period.

“The coming months and years remain uncertain, and we know our own Co-op will not be immune to the pressures the recession brings to family budgets and to local and national economies.

“We will continue to invest within our core businesses to ensure that our Co-op value resonates within Co-op households and local communities.”