Britain's biggest high street pub chain is to cut the price of a pint of beer to levels not seen since 1989 in a move likely to spark a price war.

JD Wetherspoon, which runs more than 700 pubs under the Wetherspoons and Lloyds No 1 brands, will from Monday cut the prices of a pint of Greene King IPA and a bottle of San Miguel premium lager to 99p. A bottle of Blossom Hill rosé wine will be £4.99. The average price of a pint of beer today is about £2.75.

Although Wetherspoon is no stranger to January sales, the depth and length of the price cuts has caused a stir among rival high street operators, many of which are expected to respond with similar cuts.

Robert Tchenguiz's Town & City Pub Company, which runs more than 150 pubs, mostly under the Yates's and Litten Tree brands, confirmed yesterday that it would immediately be reviewing its prices.

Ian Payne, chairman of Town & City, said: “At that price, you've got to respond. All the high street operators will, in one form or another, have to respond or they'll nick your business, especially in this climate.”

Mr Payne said that for the past six months his company had been offering ten products, including a pint of John Smith's bitter and Foster's lager, at £1.25 at about 30 of its outlets, while its 80-strong Yates's chain has been selling Echo Falls wine at £4.95 a bottle.

“Some of these have been next to Wetherspoons and we've given them a bloody nose, so we were expecting something like this,” Mr Payne said. “In some of our other pubs, we do £1.55 and £1.95 offers. We'll definitely be reviewing these prices and they'll be downwards, not upwards.”

The move highlights how difficult times are in the industry and flies in the face of recent government efforts to cut binge drinking by limiting price-led promotions.

Don Shenker, the chief executive of Alcohol Concern, said: “Understandably in the economic climate, businesses need to be competitive and people are worried by living costs. However, alcohol is not an ordinary commodity like bread or milk. Alcohol causes harm to the nation's health and economy, and there appears to be a strong link between cheap alcohol and the high levels of binge drinking in the UK.”

The Wetherspoon move has also angered Greene King's pub tenants. Mark Daniels, landlord of the Tharp Arms, at Chippenham, Cambridgeshire, said: “If I went down to Wetherspoons and bought their barrels off them at their retail price of 99p a pint, that's a hell of saving over the price I'm having to pay Greene King for my barrels at the moment.”

The Wetherspoon price reductions cover a total of five drink products - a shot of Sailor Jerry rum with a mixer will be £1.29 and a 75cl bottle of Jacques cider will be £3.99 - as well as five meals, including cottage pie, chips and peas, that will cost £2.99.

Mark Brumby, leisure analyst for Blue Oar Securities, said: “With a number of operators attempting to price steak-and-ale pies at £8.95 and pints of standard lager at near £3, this is an important move.”

Wetherspoon strongly rejected any suggestion that its price cuts would exacerbate irresponsible drinking. Keith Down, the finance director, said: “Greene King IPA has a relatively low strength and tends to be an older person's drink rather than a session ale. We've been very careful about the products we've chosen.”

Mr Down said that although the prices were well below the average price of a pint of beer, Wetherspoon's current prices on the same products were already quite low, with IPA selling for about £1.69 a pint and a bottle of San Miguel for £1.49.

He said that the cuts were an extension of the company's normal January sale. “We are just sharpening our offers,” he said. “We are still quite expensive relative to the supermarkets.”

John Hutson, the chief executive of Wetherspoon, which is believed to have enjoyed a reasonable performance over the Christmas and New Year trading period, sought to allay fears expressed by its investors over the impact that the price cuts could have on margins.

He said: “Overall, I don't think that it will be too damaging to the margin. If our pubs are busy, then hopefully people will also buy other things.”

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