Supermarket Giants Launch New Price War

Tue, 19 Jun 2007
 
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Britain's largest supermarket chains, Tesco and Asda, signalled the start of a new price war by reducing their prices by more than £500 million.

The cuts announced on Friday come amid signs of increasing pressure on the wallets of British consumers, with four interest rates rises in 10 months and an expected surge in mortgage repayment costs as many home owners come off fixed rate schemes.

Tesco announced that it would make price cuts worth 270 million pounds on 3,000 products starting today and added that it was its biggest-ever price-cut campaign .

The UK’s leading grocery retailer said its price cuts were "genuine reductions" in addition to hundreds more in-store promotions .

Commercial director Richard Brasher said, "We want to make sure that our customers don't start their summer worrying about how to balance the budget and cutting the cost of their weekly shop is the best way we can help."

Meanwhile, Asda, part of US leader Wal-Mart Stores, announced that it would be making cuts of £250 million to around 10,000 products, including food and general merchandise ranges.

Asda said its internal research showed an average family had just 146 pounds of disposable income a month.

"We are declaring a price war today. Our research shows how little the average family has left once they've covered living expenses," Chief Executive Andy Bond said in a statement.

Asda was last week named Britain's cheapest supermarket for the 10th year running by trade magazine The Grocer.

However Tesco again answered back by saying its independent price-checker shows it beats its rivals on low prices .

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