Woolworths has reported a lift in its December half profits, however inflationary pressures continue to loom over the business in the months ahead.

For the 27 weeks to January 1, sales reached $33.2 billion, up 4 per cent, while tax-paid profit grew 14 per cent to $907 million.

Group earnings before income and taxes achieved $1.6 billion, up 18.4 per cent while online sales fell 9.5 per cent as customers across all businesses returned to in-store shopping.

Across its Australian food division, sales increased 2.5 per cent to $24.4 billion driven by an increase in-store shopping while WooliesX sales (including e-commerce) fell 6.3 per cent to $2.5 billion.

Australian B2B sales improved by 23 per cent to $2.43 billion driven by then PFD division’s strong sales growth and market recovery in the half as well as an increase in supply chain provisions.

In New Zealand, sales grew marginally by 1.3 per cent to $4.1 billion, against elevated sales during the same period in the previous financial year.

Comparable sales improved by 0.3 per cent reflecting shelf price inflation during the half while e-commerce sales growth fell 0.5 per cent.

Big W sales increased 15.3 per cent to $2.7 billion “buoyed” by a strong performance in seasonal shopping including Halloween, Black Friday and Christmas in the second quarter.

Comparable sales increased 15.1 per cent during the half although online sales slumped 31.4 per cent.

Woolworths Group CEO, Brad Banducci, said sales momentum was solid in the half as the “operating rhythm” continues to improve.

“We are pleased to report a very balanced group result after an extended period of significant operational challenges and trading volatility.

“The economic environment is likely to become more challenging over the next six to 12 months as cost-of-living pressures persist and we continue to be focused on working hard on behalf of our customers to deliver value for money.”

For the first seven weeks of the second half, the business says operating conditions have continued to “stabilise” with robust sales growth.