Asda slashes price of milk as supermarket price war escalates

by Darren Davidson, Brand Republic 15-Aug-08, 09:00

LONDON - Asda and Tesco have started a new price war, this time over milk, as they battle to win shoppers facing the combined effects of rising food, energy and fuel prices.

Wal-Mart-owned Asda said it was slashing the price of milk from 80p to 50p for a two-pint bottle, its lowest price since 2001.

The move follows Tesco's introduction of Fresh 'n' Lo milk earlier this week, which costs £1.06 for a two-litre bottle. On Wednesday, Asda and Tesco reduced the price of a two-litre bottle to 99p.

The cuts could see other supermarkets following suit, with discount chain Aldi already saying it will review its price in light of Asda's offer.

In an attempt to steal Asda's thunder, Tesco has responded by saying it would lower prices on a third of its products across its stores.

Asda's price promotion also extends to orange juice and white bread, both of which are now half price.

A supermarket price war has been simmering for weeks, as shoppers become ever mindful of the need to reduce their shopping bills.

Asda and Morrisons have already cut the price of petrol and diesel by 2p a litre on Monday, while Sainsbury's is offering 5p off a litre of fuel to motorists who spend £50 on groceries.

The moves come as discount retailers such as Aldi, Lidl and Netto enjoy a boom, which is being driven by a growing army of middle-class shoppers looking for savings during the credit crunch.

Yesterday, Asda said like-for-like sales over the past three months were up 5.5% on last year.

Sales of the supermarket's Smart Price range, which covers basic goods, were up by more than 20% in the past three months and frozen food is selling better than at any time in the last 10 years.

Elsewhere, Tesco is set to expand its Fresh & Easy convenience store chain in the US beyond the west coast to Chicago.

Tesco has already opened 71 Fresh & Easy stores in Southern California, Arizona, and Nevada.

Comments

Mahmood Hussain - 16/08/2008

Good top hear the news of price reduction in eatable and perisable items. Burt we have to look how much price increases has recorded during Oil prices. This has effected badly the consumers purchasing power, Consumers are already suffering due increae in oil pries and inflatation. They are badly effected by stagflation in last one year. Their purchasing power has decline radically especially in underdevelop countries. We look forward this benefit should also be passon on to other developing and undeerdevelop countries other wise people living less than two $ per day and below the recommended povert line will increase drastically This will the cost of ecnomic health and lead to destruction and violence. This will destry the stability and peace globally.