Tesco hots up price war

TESCO is stepping up the price war pressure on its supermarket rivals with a £70m package of cuts across its product range.

The reductions, which start from Monday, will see prices on 450 products fall by an average of 11%. They follow a similar £70m of price cuts implemented by the group, Britain's biggest supermarkets chain, in January. These were largely on healthcare and baby goods.

'A price war didn't begin in 2004 for Tesco, it's been a longrunning campaign for us and we're now well into our second billion in cuts,' said Tesco's marketing director Tim Mason.

'We set the pace, which is why other supermarkets are playing catch-up,' he claimed.

The cuts range from a 43% reduction in the price of salmon steaks, taking them down from £2.99 to £1.69, to 11% off Chicken Tikka Balti ready meals, taking the price down from £2.69 to £2.39.

Competition has intensified since the Morrisons takeover of Safeway earlier this year. Morrisons has pushed through wide-ranging reductions in Safeway stores as it prepares to convert them to its successful no-frills format.

And last week, Wal-Mart-owned Asda, Britain's second-largest food retailer after overtaking Sainsbury unveiled a £65m package of price cuts.

Big Food Group, which owns struggling Iceland, warned yesterday that the fierce competition will intensify. Sales at Iceland, which had been recovering, went into decline in the final quarter of the year.