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TESCO and Asda, the UK’s biggest supermarket chains, have relaunched a price war, ending a months-long truce in which their advertising campaigns focused on higher-priced organic and natural foods.

The cuts announced on Friday came amid signs of increasing pressure on the purses of British consumers, with four interest rate rises in 10 months and an expected surge in mortgage repayment costs as many homehowners come off fixed-rate schemes. Tesco, where a third of Britons buy their groceries, said it would make price cuts worth 270-million pounds on 3000 products starting this week. It said it was the biggest price-cut campaign. Meanwhile, Asda, part of US leader WalMart Stores, announced a price cut worth 250-million pounds on items from bacon to Egyptian cotton pillows. Asda said its international research showed an average family had just 146 pounds of disposable income a month. “We are declaring a price war today. Our research shows how little the average family has left once they’ve covered living expenses,” chief executive Andy Bond said. Economic data shows shop-price inflation has already started to come off highs, easing to an annual 0.4% in May from 0.8% in April, the British Retail Consortium reported on June 6. Still, supermarket executives are also banking on consumers continuing to buy at least some of the more expensive organic and premium foods that have helped lift their profit levels in the past 18 months. Higher-end supermarkets Marks & Spencer and Waitrose, as well as Tesco and Asda, are adding hundreds of new premium food lines. A spokesman for Sainsbury, the No 3 supermarket group, which is about the same size as Asda, said it was still focusing on quality to differentiate it from rivals. – Reuters