More price cuts from supermarkets

Both Tesco and Asda announced lower prices to outflank their rivals as figures revealed inflation soared to 4.7% last month.

Separate figures from the MySupermarket Food Inflation Index showed the cost of all food and drink sold at Asda, Tesco and Sainsbury's had increased by 5.9% over the last year. The survey also found food bills for the average family had gone up by £1,040 a year in the last 12 months.

Tesco said new research showed UK consumers were more concerned about food prices now than they had been for the last 20 years.

The retailer launched a range of 350 new products under the Discount Brands at Tesco label as well as price cuts across other own-brand and branded items. It claimed the discounts could save consumers almost £24 a week on a typical shopping basket.

Tesco commercial director Richard Brasher said: "As customers tighten their belts in hard times, they tend to shop around for the best prices.

"Our research shows just how keenly they are feeling the need to watch their budgets."

Earlier, Asda said it was confident that food price inflation had peaked as it announced more than 5,000 price cuts.

Referring to the latest inflation figures, Asda chief executive Andy Bond said: "Despite these record inflation figures, I'm confident that food price inflation has peaked and that we are beginning to see the cost of goods stabilise."

The retailer said it was cutting the price of every product in its budget Smart Price food range from today as well as other brand and own-label items, allowing shoppers to cut their weekly bill by more than 50%, it claimed.