Supermarkets declare a price war
Supermarket chains Tesco and Asda have embarked on a cut-price war in an attempt to win customers struggling with the soaring cost of living.
Tesco, the UK’s biggest retailer is to reduce nearly 3,000 items by up to 50% from Monday, whilst Asda has promised to sell essential items such as bread, butter and eggs for only 50p this weekend.
According to the Office for National Statistics, the price of food has risen rapidly over the past 12 months, with food price inflation running at close to 9%. The moves by Tesco and Asda follow the recent boom in sales in discount grocery stores such as Aldi and Lidl as cash-strapped customers start hunting for cheaper food.
An Asda spokesman said: "Times are getting tough and people are feeling the pinch so we have reduced the price of these ten staple items over the weekend. It is going back to the basics like bread, eggs and butter and fruit and vegetables as well."
Retail experts expect that further price cuts will be needed in order to get families through the doors, as supermarkets accept that there will be no let up in the credit crunch and global demand for both food and fuel.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).