Supermarket group Asda has stepped up the supermarket price war with a new round of 5,000 price cuts.
The second largest UK grocer, which is owned by the US retail group Wal-Mart, said food price inflation had "peaked" and it was cutting the price of all its Smart Price range of budget basics.
Many branded goods and standard own-label products are also being reduced in price.
Asda's move comes as official figures showed the rate of inflation has risen to 4.7% - with food inflation hitting 13%.
At the same time, data from market research group TNS Worldpanel underlined the continued growth of discounters like Aldi and Lidl, at the expense of giant rivals Waitrose, Sainsbury and Tesco as consumers trade down to cheaper goods and cheaper grocers as they try to save cash.
In the 12 weeks to September 7, spending at UK grocers was up 7.3% on the same period last year, but that growth was due to price inflation. Tesco, however, recorded growth of just 6.7%, leaving its market share down to 31.5% from 31.7% a year ago. Sainsbury's has also lost ground, with its market share falling from 16% to 15.8%.
Morrison and Asda, however, with their lower cost image, are each up by more than 9% on a year ago - taking Asda's market share to a record 17.3% - and the hard discounters and frozen food chains, which also have a reputation for low prices, are making far larger gains. Iceland is up nearly 13% on a year ago, Farm Foods is ahead 26.5%, Lidl is up 11% and Aldi up some 21%.
TNS said: "Once again, younger larger families are responding to the squeeze on their housekeeping by driving discounter turnovers up sharply."
Shoppers' focus on price represents a sea change on just a year ago when supermarkets were highlighting healthy eating, the quality and provenance of their food and their green credentials.
Asda chief executive, Andy Bond, said: "Despite today's record inflation figures, I'm confident that food price inflation has peaked and that we are beginning to see the cost of goods stabilise. Customers say they're really worried about how to make ends meet and they look to supermarkets to help them. As and when cost prices fall, it will be Asda which leads the charge and drives down prices for shoppers, not just in the short term, but permanently."
Copyright 2008 guardian.co.uk
