Supermarket price war hots up as Sainsbury's declares it will match Tesco and Asda cuts

Sainsbury’s has pledged to match thousands of prices at rivals Tesco and Asda as the price war between the UK’s leading supermarkets intensifies.
The 'Brand Match' promotion starts on Wednesday and comes two weeks after Tesco launched a ￡500million 'Big Price Drop' that cut the prices on 3,000 lines including milk, bread, fruit and vegetables.
Sainsbury’s has installed a price comparison system at tills across its branches that will instantly calculate the price of branded goods in a customer’s shopping basket against the same brands at Asda and Tesco.
If the basket is cheaper at its rivals, Sainsbury’s customers will get a coupon for the difference that is valid for two weeks. The minimum spend is ￡20 and the promotion will not apply to online shopping.
Britain’s third largest supermarket has promised to match the prices charged by its main rivals on thousands of branded goods, such as Heinz Baked Beans and Tropicana orange juice.
Competition for shoppers’ cash has become increasingly fierce as economic uncertainty, wage freezes and high inflation have squeezed consumer income.
Households are facing the most severe squeeze on disposable income since World War II due to soaring food and energy costs and below-inflation pay rises.
Last week Tesco posted its worst sales UK figures in two decades as customers bought less food, shunned luxury items and switched to budget rivals such as Aldi.
Four out of five UK shoppers are now in the ‘squeezed middle’ facing struggling to cope with the surging cost of living, Tesco warned last month.
The outlook for the High Street is unlikely to improve soon after the Indian summer heaped further pressure on beleaguered retailers, research from accountants BDO released this morning.
The unseasonably hot weather kept consumers sweltering at home rather than visisting their local shopping mall, it said.
The autumnal weather may prove only a temporary respite as a retail recovery will be hampered by the gloom enveloping the economy.
Analysts at BDO said: ‘With consumer appearing to be hamstrung by weak confidence levels, retailers may have to promote heavily to stimulate demand.’
Demand, especially for big-ticket items, such as new kitchen ware and electronics is feeling the effects of the plunging disposable incomes.
Howard Archer of HIS Global Insight said: ‘The serious squeeze on  consumers’ spending power has if anything increased recently.’
Inflation is running is 4.5pc and is expected to top 5pc over the coming months, while average  earnings are rising by less than 2pc.
From Wednesday, shoppers in Sainsbury’s will be given coupons to make up the difference between its prices and those of its rivals.
Shoppers will have to spend ￡20 or more to receive the vouchers, which expire after a fortnight.
Mike Coupe, Sainsbury’s Group Commercial Director, claimed its new price matching offensive was a ‘revolution in retail’ and ‘fantastic news for hard-pressed shoppers’.
‘We have been listening to feedback from consumers and they tell us that stretched budgets mean they are shopping around to get the best deals,’ said Mr Coupe.