£500m off supermarket bills as Asda and Tesco launch price war

Asda started the battle with an extraordinary attack on its rivals and a pledge to cut the price of 10,000 products by £250million.

Tesco responded within hours by promising reductions of £ 270million in what it called its biggest ever price blitz'.

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The country's two biggest supermarkets are vying to be the cheapest. Sainsbury's and Morrisons are also expected to join the price cutting.

Asda begins its price cuts today as part of a campaign to capitalise on an independent study naming it as the UK's cheapest grocer for the tenth year in a row.

Asda's chief executive Andy Bond

– who can count on the deep pockets of American owners Wal-Mart to back him up – announced: We are declaring a supermarket price war today.

Rip- off Britain, where other retailers con their customers, is alive and well and we are determined to put a stop to it.

Over the next year we're going to expose businesses that prey on customers, forcing them to pay through the nose for goods and services.'

While Asda's main focus is groceries, its attack ranges to the price of electrical goods, football shirts, DVDs, CDs, furniture, beauty and healthcare products. Asda has producedresearch which appears to show that the typical family has only £146 per month of disposable income after they've paid all the bills, including food.

Families have been squeezed by rising interest rates, which have pushed up the cost of mortgages, together with higher household and transport bills.

Tesco insists that independent price surveys prove that it is Britain's cheapest supermarket and commercial director Richard Brasher said his company has been named Britain's favourite supermarket by at least one recent poll.

Consumers have had a tough start to the year with interest rate rises hitting many hard and inflation creeping into some areas of household spending,' he said.

We want to make sure our customers don't start their summer worrying about how to balance the budget.'

When Wal-Mart bought Asda eight years ago there were hopes the deal would deliver cheap U.S.-style prices. The chain became the first to offer a complete school uniform, including shoes, for less than £10, a £19 men's suit, £60 wedding dresses and £9 DVD players. However, consumers may well view the price cut claims with scepticism. Government studies have identified a series of sharp annual price hikes on staple foods, such as dairy, vegetables and bread.

Industry research also suggests that price cuts are often accompanied by increases on other products.