As revealed on (15 September), Tesco this week launched a new range of 350 discounted items in response to the recent gains made by discounters such as Aldi and Lidl.

But the news was trumped yesterday when Asda signalled a major price war by slashing the cost of 5,000 items, including every product in its Smart Price range, as Asda chief executive Andy Bond said food inflation had peaked.

“Despite… record inflation figures I’m confident that food price inflation has peaked and that we are beginning to see the cost of goods stabilise,” said Bond. “When I talk to customers, they tell me that they’re really worried about how to make ends meet and they look to supermarkets to help them. That’s why I’m determined that as and when cost prices fall it will be Asda which leads the charge and drives down prices for shoppers not just in the short term but permanently.”

The news comes with prices in the UK rising at their fastest level for 16 years, according to data published yesterday by the Office for National Statistics, with inflation standing at 4.7% and food inflation at a massive 13%.

Bond claimed shoppers could cut their bills in half by switching to Asda.

He said: “By lowering the price entry point to fresh food, value-conscious shoppers could slash their weekly shopping bill by more than 50%. Whilst this is our budget food range, customers can be absolutely assured of its quality with every single product in the range being free from artificial flavours and colourings. We will also be cutting the price of well-known brand and own-label food and grocery items that households have to buy week in, week out – in all over 5,000 products.”

Earlier this week The Grocer revealed that Tesco plans to become “Britain’s biggest discounter” and is introducing 350 new products across ‘Market Value’ and ‘Discounter’ ranges, which are set to reach shelves today.

"We will make sure that if there is a price war we will win it," declared Tesco commercial director Richard Brasher. "The centre of gravity of the marketplace has changed. There is an opportunity for better quality [items], better presented and at more competitive prices."