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Last Updated: Monday, 12 January, 2004, 07:52 GMT
Supermarket price war predicted
Food shelves
Shopping bills could fall
Intensifying competition among supermarkets will cause a fall in food prices, says a retail research group.

The expected takeover of Safeway by the Bradford-based supermarket Morrisons will trigger a new price war in the coming year, claims Verdict.

Consumers could benefit from an average 1% fall in prices, which amounts to a 40 annual saving for each household.

Verdict senior analyst Richard Hyman said this marked a new era, after years of criticism that food was over-priced.

The study predicts Morrisons would be a more aggressive competitor than Safeways.

And Sainsbury's and Asda will try and close the gap on market leader Tesco.

Morrisons is at the centre of a 3bn ($5.2bn) takeover bid for rival grocer Safeway.

Currently the UK's fifth biggest chain, the acquisition of Safeway would double the market share of Morrisons, which reported record sales over Christmas.

An across-the-board reduction in food prices would be the first since the 1980s.

The BBC's Janet Barrie
"Some say a fall in prices shows that supermarkets have been charging too much"

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