Tesco has said it expects to make lower profits this year amid a growing price war amount the UK's major supermarkets. The UK's biggest grocer has forecast profits of between £2.7bn and £3bn compared with the £3.1bn it made for the financial year that has just ended.

Britain's supermarkets have been engaged in the early stages of a price war that has already wiped billions off their stock market values in recent months.

Tesco has indicated a growing price war among UK supermarkets, with its chief executive, Ken Murphy, noting an "intensification" of competition and targeting up to £500 million in cost reductions.