Marks & Spencer’s new boss, Marc Bolland, today reported much better-than-expected sales figures but warned that the coming months will be tough as the government’s looming austerity measures – public spending cuts and January’s planned increase in VAT – threaten to shake consumer confidence.

Bolland said M&S had been pulling in more customers, who are buying higher quality items, and that the store is profiting from its aging shoppers. “Older customers are better prepared for tougher times,” said the chief executive, who replaced Sir Stuart Rose in May. “They have seen it before and they have more savings.”

However, he added that the economy, together with rising commodity prices – such as cotton up 70% on this time last year – and “significantly tougher comparatives” will make sales gains harder to achieve in the coming weeks. And he warned City analysts not to increase their profit expectations, because the business was spending more on marketing and advertising.

Nevertheless, M&S shares were the FTSE-100′s second biggest riser, adding 19p to 410p, their highest level in more than two years and nearly double the level they were changing hands at 12 months ago. M&S said clothing, homewares and food all put in strong performances over the most recent three months, as M&S won sales from rivals.

Bolland said he hoped to absorb the impact of rising commodity prices and VAT rates on some clothes, so that opening price points – the cheapest and most competitive products – will not have to go up. Bolland is currently working on a strategic review of M&S, which is expected to address key issues such as how to pull in younger shoppers, how to expand internationally, and whether to offer online grocery deliveries.

It will be unveiled in four weeks, when the retailer presents its first-half profit figures. Echoing comments made earlier this week by his counterparts at Tesco and J Sainsbury, Bolland said he did not expect the government’s spending cuts, to be unveiled on 20 October, to tip the economy back into recession.

“No, we don’t expect a double dip,” he said. “Yes, we expect customers to have a more difficult trading environment but we expect to be well positioned.” Tesco, Britain’s biggest retailer, struck an upbeat tone on Tuesday, predicting a “slow and steady” economic recovery.

Like-for-like UK sales at M&S climbed 5.3% in the 13 weeks to 2 October, with clothes and homewares roaring 7% ahead and food up 3.7%. Matthew McEachran, retail analyst at Singer, described the figures as “excellent” and “exceeding expectations”.

M&S cemented its position as Britain’s biggest clothing retailer by increasing its share of the clothes market to 10.3% from 9.6%, helped by new products such as the “two sizes bigger” bra and “Miracle” crease-resistant linen. In the coming weeks it is hoping for bumper sales from new “front-enhancing” pants for men.

The retailer also credited its latest advertising campaign, fronted by X-Factor judge Dannii Minogue, ex-footballer Jamie Redknap and Brazilian model Ana Beatriz Barros for driving more customers into its stores. The chain has just had a record autumn season for women’s footwear, selling 300,000 pairs of boots – 50% more than last year.

Bolland said knitwear and men’s suits were benefiting from a return to quality: “With an uncertain environment people are choosing quality. They are choosing things that last, not just for a couple of days or a couple of months.” In the foodhalls, about 370 products have been launched, including “In a Pot” ready meals, groceries and biscuits.

International sales were up 6.2%, although trading remains difficult in Ireland and Greece. Neil Saunders, consulting director of Verdict, said the better-than-expected figures could mark the start of a new era. “To some extent, market conditions are now much more favourable to M&S and consumer trends should be to its advantage.

“In clothing, shoppers are more interested in quality and are willing to trade up; while in food, lower inflation means a less price sensitive consumer who is willing to buy more premium product,” Saunders said. “Both of these things play into M&S’s hands and, along with its development work over the past year, have helped to generate this set of positive numbers.

However, he added: “The big question mark, and the big challenge for Bolland, is over how long can this performance be sustained. With the negative headwinds of government cuts on the horizon, the consumer environment is likely to become much tougher.”