The big four supermarkets were pulled into the wider market sell-off on Monday as an analyst said that sales growth did not look sustainable.

Alastair Johnson, of JPMorgan, said that the strong sales reported in the past few weeks by Sainsbury’s, Morrisons, Tesco and Asda had been bolstered by inflation. They had been “living in an inflation bubble”, he said. When sterling sank late last year, the price of British food went up and that had helped the grocers to boost the value of their sales.

Mr Johnson warned that, with the dollar and euro falling against sterling, the food inflation bubble was about to burst. “Inflation has masked underperformance,” he said. A price war could be around the corner, with Waitrose launching a cut-price range, the Co-op set to expand after its purchase of Somerfield, and Sainsbury’s and Morrisons about to expand store space.

J Sainsbury, down 3½p at 313¾p, remains Mr Johnson’s preferred stock because he believes that the group will win market share. But he downgraded Wm Morrison, down 5¼p at 240p, from “buy” to “hold” and reiterated “sell” on Tesco, which fell 3.2p to 356½p, which he believes will eventually have to cut its profit-margin targets to keep sales growing.

The FTSE 100 fell 111.88 points to 4,234.05 as the World Bank warned that the global economy was still “unusually uncertain” and cut its growth forecasts for most countries.

That sent investors rushing back into the dollar, dumping commodities such as oil and copper, which in turn pushed down the prices of both. There were also fears that China had stopped stockpiling the metal.

Miners and oil majors led the sell-off, with Vedanta Resources, already under pressure after announcing a dilutive convertible bond, closing down 120p at £13.02. BG Group fell 65p to £10.01.

Anglo American rose against the trend, closing 75p up at £16.98 as it rejected a nil-premium paper approach from Xstrata, down 45.9p at 635.1p. Traders are hoping that Xstrata will offer more or that Vale, of Brazil, will wade in. Lonmin fell 102p to £11.48 amid expectations that Xstrata will have to sell its stake in the platinum miner if a merger with Anglo is to be approved by competition regulators.

Smiths Group was one of only four FTSE 100 gainers, rising 22½p to 671½p, as Deutsche Bank highlighted its underperformance so far this year — based on worries over slow orders for its detection business and medical products. Deutsche said that costcutting was starting to work and that its end markets should start to recover next year.

Tullow Oil fell 57½p to 867½p despite reports that CNOOC, of China, had hired Goldman Sachs to advise it on a bid for Kosmos Energy, Tullow’s partner in the Jubilee field off Ghana, which is said to be worth $15 billion in its entirety.

McBride, the maker of own-label cleaning products for supermarkets, rose 7p to 120½p before a trading update on Tuesday.

New York: The Dow Jones industrial average closed 200.72 points down at 8,339.01, after the World Bank’s declaration that prospects for the global economy were “unusually uncertain” weighed heavily on sentiment. Energy companies were the biggest losers.

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