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 Monday, 6 January, 2003, 07:00 GMT
New supermarket price war
Shoppers at Tesco
Some prices are being cut but others might rise
Two of the UK's biggest supermarkets have announced price cuts to lure shoppers through their doors.

Typically in the two or three months leading up to one of these initiatives, prices are increased

Kevin Hawkins, Safeway director
Tesco said it was cutting 80m ($129m) from the price of more than 1,000 products with some prices falling by nearly a third.

And rival Asda said it would be cutting some prices in its George clothing range.

But Kevin Hawkins, a director of the country's fourth biggest supermarket, Safeway, said he viewed the reductions with a big touch of scepticism.

He told BBC Radio 4's Today programme: "We have these so-called price wars about three times a year.

"Typically in the two or three months leading up to one of these initiatives, prices are increased."

And he warned that while the price reductions were being highlighted, the cost of other goods would go up.

Losing customers

At Tesco, director John Gildersleeve said: "Lots of customers are telling us they need to tighten their belts this year.

"We've listened and taken pounds off their shopping in a bid to help."

An Asda spokeswoman said of her company's clothing price cuts: "They are permanent price cuts.

"It is part of an ongoing commitment to pass any savings we can make back to customers.

"The reason we can do this is because we were bought by Wal-Mart in 1999 so we have much more buying power."

If Tesco and Asda really are engaging in a tough price war then their rivals, Sainsbury and Safeway could lose some of their customers.

Smaller chains such as Somerfield might also be hit.

See also:

17 Dec 02 | Business
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