Asda, Britain’s second biggest supermarket chain, today claimed that food inflation has peaked as it pledged to slash shopping bills by cutting the price of 5,000 products.

The group is cutting the price of every food product sold under its Smart Price budget range, with a loaf of bread cut to 30p and sausages to 6p each from tomorrow.

The move is the latest sign that supermarkets are desperate to respond to customers "trading down" to beat the credit crunch. Morrisons reported a 19 per cent rise in half-year profits last week while Waitrose, the upmarket supermarket chain, suffered an 8.4 per cent drop.

Andy Bond, chief executive of Asda, said: “Despite today’s record inflation figures, I’m confident that food price inflation has peaked and that we are beginning to see the cost of goods stabilise.

“When I talk to customers they tell me that they’re really worried about how to make ends meet and they look to supermarkets to help them.

“For the first time ever, from tomorrow, we are cutting the price of every single Smart Price food product. By lowering the price entry point to fresh food, value conscious shoppers could slash their weekly shopping bill by more than 50 per cent."

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