A fresh price war on the high street beckons as supermarket chain Tesco yesterday unveiled a £70 million package of cuts.

Tesco said it was slashing the prices of more than 600 products by an average of 8 per cent.

The reductions will cover products in all areas of the group's stores but will focus particularly on health, beauty and baby products such as toothpaste, medicines and baby wipes.

The campaign represents an attempt by Tesco to lure cash-strapped shoppers who held out for last-minute bargains in the pre-Christmas rush.

It is also expected to throw down the gauntlet to high street chemist Boots, which is undergoing a shake-up following a difficult period.

Tesco claimed yesterday that parents shopping for a typical basket of 12 baby products, including such favourites as Johnson's baby powder and Farley's rusks, could save 11 per cent in its stores compared with Boots.

Tesco director Tim Mason said the group had invested more than £1.3 billion in price cuts during the past six years.

"Many of us spend too much over Christmas and by lowering prices as customers do their first shop of the year, we are doing our bit to help," he said.

In a trading update on Friday, W H Smith became the first high street retailer to reveal that consumer caution had hit pre-Christmas trading.

Shares in the stationer and bookseller plunged after it warned that annual profits would be "materially below market expectations" following poor festive sales.

Monday January 05, 2004