FOLLOWING a drop in Tesco's profits, experts have predicted they could trigger a supermarket price war.
Britain's biggest supermarket retailer, Tesco is expected to cut its 5.2 per cent profit margin in order to compete with significant price drops from other shops. Tesco has struggled recently to compete with other supermarkets such as Asda, Sainsbury's and Morrisons. Also the increasing popularity of cheaper retailers such as Lidl and Aldi has pushed the idea forward.
Last year Tesco abandoned trading in Japan and America due to poor trading figures.
The company also had a disappointing festive period as it saw sales fall by 0.4 per cent up to February 4. There was also a 2.4 per cent drop in UK like-for-like sales over the six weeks up to February 2.
Due to rising prices, consumers are now more likely to invest in small local convenience shops and online, rather than going to the large supermarkets.
Tesco chief executive Philip Clarke admitted: "We didn't change enough, not enough for our customers at least.
"Our prices must get better and be more stable."
With the rumours circulating about Tesco's price drop, there is speculation it could result in other supermarkets being forced into further price reductions, triggering a price war.
With 45 per cent of people spending a higher proportion of their available income at the supermarket compared to last year, many people will view this as a positive thing and a potential answer to the soaring price of everyday items.
■ To find out how competitive the major store chains are in the county at the moment, we went out onto the streets of Gloucestershire yesterday to carry out a simple price comparison of a small basket of essential items.
LIDL £16.29 Hovis white bread 99p Quaker Porridge Oats £1.98 (1kg) Four frozen beef burgers £1.79 Whole chicken £2.40 Anchor Butter £1.70 Pilgrims Choice cheese £3.99 1 pint semi-skimmed milk 45p 160 PG Tips teabags £2.99WAITROSE £17.30 Hovis white bread £1.35 (2 for £2) Oats so Simple Porridge £2.45 Four original Birds Eye beef burgers £1.35 Whole chicken £4.50 Anchor Butter £1.70 Cathedral City cheese £3 1 pint semi-skimmed milk 60p 80 PG Tips teabags £2.29TESCO £17.37 Hovis white bread £1 Oats so Simple Porridge - £2.99 Four original Birds Eye beef burgers £1.35 Whole chicken £5 (2 for £8) Anchor Butter £1.75 Cathedral City (350g) £2.50 (half price from £5); 1 pint semi-skimmed milk 49p 80 PG Tips teabags £2.29MORRISONS £18.70 Hovis white bread £1 Oats so Simple Porridge £2.99 Four original Birds Eye beef burgers £1.45 Whole chicken £4.10 Anchor Butter £1.70 (2 for £2.50) Cathedral City cheese £4.48 1 pint semi-skimmed milk 49p 80 PG Tips teabags £2.49ASDA £18.63 Hovis white bread £1 Oats so Simple Porridge £2.98 Four original Birds Eye beef burgers £1 Whole chicken £4.50 Anchor Butter £1.70 (2 for £3) Cathedral City cheese £4.48 1 pint semi-skimmed milk 49p 80 PG Tips teabags £2.48SAINSBURY’S £20.14 Hovis white bread £1.35 (2 for £2) Oats so Simple Porridge £2.99 Four original Birds Eye beef burgers £1.50 Whole chicken £4.50 (3 for £10) Anchor Butter £1.70 Cathedral City cheese £5 1 pint semi-skimmed milk 60p 80 PG Tip teabags £2.50