Sainsbury's benefited from an extra two million visits from shoppers in the week of the Queen's Diamond Jubilee amid strong demand for party food and bunting.
The UK's third biggest supermarket chain, which operates more than 1,000 stores, said underlying sales rose 1.4% in the 12 weeks to June 9, which was slower than the 2.6% in the previous quarter but according to the grocer was still stronger than the rest of the market.
Sainsbury's saw 24 million customer transactions - about two million more than normal - in the week of the jubilee and sold 550 miles of bunting, 670,000 Union Jack flags and more than 600,000 bottles of champagne and sparkling wine.
It enjoyed its best ever weekly sales of strawberries, with more than two million punnets sold, 13% greater than the previous record in Wimbledon week last year.
The strong performance will heap more pressure on struggling market leader Tesco, which earlier this week reported a 1.5% fall in underlying sales for a period not including jubilee week.
Chief executive Justin King said: "Customers continued the habit of savvy shopping to save money in order to be able to treat themselves on special occasions, shown by strong sales in the lead-up to the Jubilee celebrations."
He added that Sainsbury's was "well placed" to continue to outperform the market.
Shares opened 2% lower today as the like-for-like sales figure came in slightly below some City forecasts for growth of up to 2%.
Seymour Pierce stockbrokers kept its forecast for profits this year at £770 million, compared with £712 million a year earlier, and said the company should see some benefit from sporting events such as the Olympics.
Sainsbury's is likely to have benefited more than most from the Jubilee celebrations. It was one of the main sponsors of the Thames Diamond Jubilee Pageant and organised its own Jubilee Family Festival in Hyde Park featuring performances from BBC1's Strictly Come Dancing.
The period also saw its biggest ever week of clothing sales, with the fourth collection of womenswear designed by TV fashion guru Gok Wan set to be the most successful to date.
Its Sainsbury's Local convenience store estate enjoyed 16% growth after 21 new stores were opened in the period.
Improvements to its website allowing shoppers to order easily from mobile phones helped drive a 20% rise in online sales.
The group has been one of the strongest performers in the supermarket price war, helped by its Brand Match scheme, which guarantees to match Asda and Tesco on 14,000 branded goods.
Its own-label ranges have played a key part in recent strong performances and have underpinned its Live Well For Less advertising campaigns.
Sainsbury's is also three-quarters of the way through revamping its By Sainsbury's own-label range, which has included adding new products and improving existing ones.