South African grocery retail Spar Group Ltd has posted a 9.2% increase in first-quarter sales, but nevertheless said that it remained “cautious” in its outlook for the remainder of the year.

The company said that the quarter to end December was “challenging”, although turnover did rise to ZAR8.8bn (US$1.14bn).

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Although Spar said that it booked volume gains during the period, the company added that food deflation had depressed sales gains.

“This performance continues to reflect positive volume growth and is strongly influenced by a significant decrease in food inflation,” the company said.

According to Statistics South Africa, food prices fell in November and December, prompting commentators to suggest that the market is likely to witness further food deflation this year and causing concern over Spar’s performance going forward.

Spar said its financial results for the six months ending 31 March will be released on 12 May.

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