The National Federation of Retail Newsagents and the Association of News Retailing have joined forces for the first time to attack The Guardian newspaper for reducing newsagents' terms by 1%.

This week, The Guardian increased the price of its Saturday edition from £1.90 to £2.10 and its Monday to Friday copy from £1 to £1.20, but reduced retailer percentage margins from 25% to 24%. The two associations claimed that, in effect, the newspaper's move equated to a loss of 1.2p on every copy sold, denying income to retailers of more than £750,000 a year.

"This action, following margin cuts from The Express and Mail, is totally unacceptable," said Kieran McDonnell, National President of the NFRN. "The timing is also incredible given that the OFT will shortly decide whether to undertake a further review of the news industry."

Shane Brennan, ANR public affairs director, added: "The OFT must not continue to sanction a broken market where publishers are free to make summary changes to terms and retailers have no choice but to accept them."

The Guardian's move is the latest squeeze in margins by a newspaper publisher. This summer, The Daily Mail increased its cover price by 5p, but reduced newsagents' margins from 24.2% to 23.2%. The Sunday Express also reduced its cover price from £1.35 to £1.

On Wednesday, the NFRN wrote to 27 advertisers in The Guardian alerting them to the dispute.