The expected takeover of Safeway by the Bradford-based supermarket Morrisons will trigger a new price war in the coming year, according to retail analyst Verdict.
Consumers could benefit from an average one per cent 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 Safeway. And Sainsbury's and Asda will try and close the gap on Tesco.
An across-the-board reduction in food prices would be the first since the 1980s.
