Multiples in the Irish Republic are stepping up their grocery price war as the challenge from discount chains intensifies and consumer spending hits a 20-year low. Dunnes Stores, the second-largest player, set off the latest round of price cuts by offering a 10% reduction on all weekend grocery bills. Tesco, which recently unveiled its Cash Savers promotion, hit back with a €10 price cut on all online grocery orders.

Superquinn, which is currently attracting UK suitors, then threw its hat in the ring, offering a weekend “return to 1970s prices” on staples such as bread, butter, beans and sugar.

The latest skirmish came as a report from the Central Statistics Office showed a slump in consumer spending, prompted by worries over the weakening Irish economy, increasing job losses and rising mortgage and energy costs.

Reflecting the belt-tightening by shoppers, Aldi and Lidl have increased their combined share of the €8.5bn Irish grocery market to 7.1% compared with 6.8% last year. Both have now embarked on expansion and are assessing sites in provincial towns where they can double their number of outlets.

As many as 18 locations are being examined, according to trade sources. The Irish property slump will also help the discounters’ expansion, with development land prices up to 50% lower than a year ago.