Greggs is shrugging off the effects of the credit crunch with a total sales increase of 6.7% in the 16 weeks to 4 October.

The bakery retailer said sales growth slowed over weeks seven to 13, but have picked up again more recently. Poor weather, and more favourable 2007 conditions, were blamed for the slower growth.

In a interim management statement, the company said: “In spite of the increasing pressure on household budgets we have seen only modest erosion of customer numbers and transaction values.”

Greggs is reducing its operation profit prediction for the financial year by £3 million, due to the slower sales growth and temporary margin impact from higher costs.

Prices of many major ingredients including vegetable oils and vehicle fuel are beginning to stablise, so operating margins should improve in the final 12 weeks of the year, it said.

Greggs has 1,399 shops, and has opened 53 new shops and closed 22 this year.