It may feel to some as if there has been a food price war raging for more than a year. Much was made, as the credit crunch struck last autumn, of how European discount retailers such as Aldi and Lidl were about to expand aggressively in the UK and clean up as the harsher economic conditions played to their strengths.

For a while this looked to be happening, with Tesco in particular showing — uncharacteristically — feet of clay as it tried to respond to the brash newcomers. A promotion under the banner “Britain’s biggest discounter” was initially thought to have backfired. But Tesco did not become Britain’s biggest grocer by accident and quickly put the newcomers in their place. In the meantime, though, Tesco’s traditional competitors raised their game considerably. Morrisons, for years hindered by the effort of having to integrate Safeway, is aiming to top the sales growth charts for a third successive Christmas. Asda, too, is firing on all cylinders while Sainsbury’s, which had been expected to suffer during the recession, has turned out to be doughtier than expected in defending its market share through some skilled marketing of its “basics” lines and own brands.

So it can be said that, for the first time in a decade, all of the big four are operating at full strength.

The truth, though, is that while all this activity may have felt like a price war the grocers have largely been talking a good game and cashing in on food price inflation, which rose for much of last year and peaked at an annual rate of 9 per cent in March.

Since then, food price inflation has been falling, putting the grocers under greater pressure, since they have to sell more goods to keep sales growing at the same rate.

And that means that the real action is about to begin. With the discounters seen off, Tesco is back on more familiar turf fighting its more traditional rivals, which is why the price war has taken a new turn. Earlier this year Tesco relaunched its popular Clubcard scheme and turned the screw further in August by doubling the reward points to the 16 million regular users in an attempt to ensure they did not go elsewhere.

The results of that are now being seen. Sir Terry Leahy, the chief executive, claimed recently to have been taking market share from Sainsbury’s and official industry data, published last night, appears to back him. During the 12 weeks to November 1, Tesco enjoyed sales growth of 4.8 per cent, compared with 4.4 per cent at Sainsbury’s. It is the first time in two years that Tesco has increased its market share and, tellingly, it seems to have done so at the expense of Sainsbury’s when it was promoting more lines, albeit not to the same extent as Tesco and Morrisons.

How the others react will be crucial. Morrisons was recently reported to have told suppliers that it was seeking more support for promotions while Asda has, to date, concentrated on providing deep discounts on a handful of products at a time. Asda’s response is seen as particularly crucial because of its greater presence in non-food items. The absence of Woolworths — which was one of Britain’s biggest toy retailers — from the Christmas market has given all the supermarkets an opportunity and the signs are that some of them may try to discount non-food more aggressively than groceries to begin with. That, in turn, could drag in established high street names. Sainsbury’s, for example, has cut the price of its clothing ranges aggressively.

The other reason why the price war is about to become more ferocious is that food inflation could well turn negative in the new year. Like-for-like sales — a measure that strips out new floorspace added during the previous 12 months — are already running at less than food price inflation and this poses a huge challenge for the supermarkets. The battle has also spread elsewhere, with Marks & Spencer and Waitrose slugging it out at the top end of the sector, although — since the pair only account for about 7 per cent of the grocery market combined — this is largely a sideshow.

In the meantime, apart from shoppers, there should be another group of winners: the legions of celebrities who are increasingly being signed up by grocers to promote their wares at Christmas.

While Sainsbury’s is expected to rely on the tried-and-tested Jamie Oliver and Morrisons is again likely to wheel out its now-established cast of stars, including Richard Hammond, Alan Hansen, Nick Hancock and Denise van Outen, M&S recently upped the ante by presenting Stephen Fry, John Sergeant, Philip Glenister, Joanna Lumley and Jennifer Saunders as the stars of its adverts.

Tesco, which stunned everyone last year by hiring Des O’Connor to front its campaign, has yet to show its hand. But expect it to make an impact when it does.

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