Supermarket chain Asda announced yesterday that it would cut prices on thousands of its products this month, in a move that will surely pave way for supermarket price war.

Asda customers will enjoy average price cut of 13 per cent on 3,600 essential items including milk, carrots, rice, potatoes, bananas and nappies.

Commenting on the issue, Asda's chief merchandising officer Darren Blackhurst said, "Unlike our rivals, we're lowering prices on a more permanent basis on the products people want to buy, not just products we want to sell them."

Asda's recent move, which is expected to save millions of pounds for the shoppers, followed statements by other supermarket chains such as Tesco and Morrison's that they would not pass the increase in VAT to their customers.

It may be noted here that VAT has returned to its pre-recession level of 17.5 per cent. The Government had reduced VAT to 15 per cent in 2008 to support struggling economy in wake of recession.

Asda, which is owned by world's leading retailer US Wal-Mart, said the cuts would last for a minimum of six to twelve weeks.