Supermarket giants Asda and Morrisons launch a price war amid a cost-of-living crisis

Major supermarkets Asda and Morrisons have started cutting prices, with Asda slashing prices by an average of 12%, while Waitrose has launched a promotional campaign for its own lower-priced goods

Supermarket giants Asda and Morrisons have started a price war amid the cost-of-living crisis.

Meanwhile, upmarket supermarket Waitrose has launched an advertising campaign promoting its more affordable Essential range for the first time.

Both chains announced sweeping reductions on everyday items in what is expected to be a battle for business as households seek to cut corners wherever they can.

Asda said it would pour £73m into price cuts, along with a pay rise for workers.

Britain’s third-largest supermarket said it had “lowered and fixed” the price of over 100 family favorites and will keep the price low until the end of the year.

On average, prices will fall by 12%, according to Asda.

Meanwhile, given the rising cost of living, Morrisons has slashed prices on hundreds of products including eggs, beef and diapers.

The UK’s fourth largest supermarket said it has reduced costs on more than 500 products – including chilled, frozen and pantry groceries, meat and cereal – which accounts for around 6% of its total sales.

All eyes will be on how other supermarkets, including Tesco and Sainsbury’s, react.

Tesco has already signaled that its profits could be hurt this year by investing in price cuts.

However, a senior industry source suggested the scale of the price war could be dampened as discount chains Aldi and Lidl missed a boost from online sales during the Covid lockdown and Asda and Morrisons are saddled with debt following their recent acquisition .

It came as Asda’s latest income tracker recorded its biggest drop in disposable income in March.

The study found that low-income families had 74% less disposable income in March than in the same period last year.

At the same time, pundits warn prices of everything from beer and chicken, and pasta to sausage, could skyrocket due to shortages and rising wholesale costs.

Some supermarkets are already limiting how much sunflower oil, which mostly comes from Ukraine, customers can buy.

And other shortages and punitive price hikes are making themselves felt in the grocery chain, inevitably affecting household choice and budgets.

Tim Lang, professor emeritus of food policy at the City, University of London, said: “We are talking about rationing sunflower oil today, but it could soon be other products.”

Asda’s price cuts include staples like John West tuna, which fell 14% from £3.50 to £3, and 500g Asda Easy Cook rice, which fell 25% from £1 to 75p.

The chain, now part-owned by Blackburn-born billionaire brothers Issa, also confirmed to 120,000 hourly workers that their pay will rise to £10.10 an hour from July.

Mohsin Issa said: “We know that rising costs of living are tightening household budgets and we are committed to doing everything we can to support our customers, colleagues and communities during these extraordinarily difficult times.”

Morrison CEO David Potts said the price cuts would make a tangible difference for consumers.

“We know our customers are under a lot of financial pressure right now and we want to do our part to help them with grocery shopping costs,” he said.

A 30-pack of own-brand eggs will sell for £2.99 instead of the previous £3.40, while a pack of paracetamol will cost 29p instead of 65p.

Which? Money expert Reena Sewraz said: “The UK’s largest supermarkets regularly come out more expensive than Aldi and Lidl in our research, so it’s not surprising that they are now struggling for customer numbers and cutting prices to regain a competitive edge.

“If you’re looking to lower the cost of your grocery shopping, it always pays to shop around, stick to a grocery list, and choose name-brand products over name-brand products.”