Tesco is planning to announce price cuts worth €100 million together with a new range of lower-cost own-brand products as part of a plan to go head-to-head with discount retailers Aldi and Lidl. The move by Tesco follows a review of its own-brand products after consumers began switching to Aldi and Lidl. Ann Fitzgerald, chief executive of the National Consumer Agency, said cost was the primary motivation for the shift in consumer shopping patterns.

UK supermarkets have come under fire over the past few months for a lack of competition and rising prices. Two years ago the Groceries Order was axed by the Government which argued that the legislation’s ban on below-cost selling was keeping food prices artificially high. However, since the order was lifted, bills for food, drink and household essentials have increased every month, according to inflation figures.

The survey, conducted last December, found that discount stores Aldi and Lidl were showing real price competition between each other and were performing very favourably when compared with Dunnes, Tesco and SuperValu’s mid-range own brand products.

Last month, Tesco’s finance director, Andrew Higginson, said discounters were having their “moment in the sun” as consumers economised. Tesco's low-cost moves will cover Tesco Value products in addition to price cuts on 3,000 items.