Britain’s second biggest supermarket chain fears the high street faces its toughest Christmas yet as shoppers battle rising bills and higher food prices.

Asda said it was clear that customers had less money to spend, despite unveiling a 5.5 per cent increase in like-for-like sales for the second quarter of its financial year.

Judith McKenna, chief financial director of Asda said: “Christmas is going to be as tough a Christmas as many of us have seen, from a customer perspective but the retailers as well.

“Ours is a healthy business and this is a strong set of results, but the thing we need to watch out for more than anything is complacency. Customers are going to get more demanding as the year goes on.”

Asda’s second-quarter figures came hours after fierce rival Tesco announced price cuts on 18,000 products in its biggest weekly promotion.

Tesco claims to have saved shoppers £620 million since the beginning of the year in promotions and price cuts.

Asda vowed to continue to run its series of 50p weekend promotions, promising more details tomorrow morning. Ms McKenna said: “Pricing is as keen as it has ever been.”

Asda’s second-quarter sales figures came as Wal-Mart, its American owner, announced a 17 per cent rise in quarterly profits to £3.45 billion after benefiting from an influx of new customers looking to make their dollars stretch further.

Ms McKenna said Asda was witnessing an increase in the number of wealthier customers coming into its stores.

However, she added that while sales of organic produce was rising, so were sales of frozen food as shoppers worried about money look to cut down on the amount of food waste in the home. Asda has also seen “phenomenal trading” at its coastal stores in the south of England, as consumers take fewer holidays abroad.

Shoppers are feeling the pinch from rising food prices, soaring energy bills and the faltering housing market. The high cost of living pushed the official inflation rate to 4.4 per cent in July — the highest level for 16 years.

Ms McKenna said that, as far as Asda was concerned, food price inflation was nowhere near the 13 per cent level recorded by the Office for National Statistics.

“So far this week, I’ve heard 13 per cent food inflation on the CPI measure and 27 per cent from MySupermarket.co.uk,” she said. “Those kinds of numbers make me take a sharp intake of breath. I don’t agree that inflation is anywhere near those kind of levels.”

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