* Tesco cuts prices on over 3,500 items
* Asda says cutting prices on 5,000 staple products (recasts with Tesco price cuts)
LONDON, Feb 26 (Reuters) - Britain's two biggest
supermarket groups, Tesco
Market leader Tesco said it was cutting prices on more than 3,500 items, including 500 frozen foods, which are seeing strong demand as cash-strapped consumers seek to cut back on waste.
Asda, owned by Wal-Mart Stores Inc
Britons are curbing spending amid a deepening recession which has seen unemployment rise and house prices plunge.
Supermarkets have responded by stepping up promotions and lowering prices, while also extending cost cutting plans in an attempt to preserve profit margins.
Both Tesco and Asda announced price cutting campaigns in
January, while fast-growing Wm Morrison Supermarkets
Tesco said that, not including the latest reductions, it had invested 100 million pounds ($142.5 million) in cutting prices of everyday items so far this year. The latest reductions see 1 litre of Walls ice cream on sale for 1 pound and Sara Lee lemon meringue pie cut to 1.49 pounds from 2.99 pounds.
"Millions of customers are right now worrying about how they are going to make this month's pay packet stretch until the next one arrives," said Tesco Commercial and Marketing Director Richard Brasher.
"The answer for an increasing number is to stock up the freezer while they have cash in their pockets."
Asda said it had cut 7,500 prices since Jan. 1 and by Easter would have lowered 12,500 prices since the start of the year.
It also pledged not to engage in any deals or promotions that were not genuine price reductions.
"We're engaging with our customers in a transparent way to ensure the products we sell and the prices we charge meet their needs in these difficult times," Chief Executive Andy Bond said.
Asda also said it was launching a "Saving You Money" TV channel on YouTube which allows customers to share money-saving tips and offer each other advice on how to cut their energy bills and reduce food waste.
The latest market share data from researchers Nielsen show Asda overtook Morrison to become the fastest growing of Britain's top four grocers in the four weeks to Jan. 24. [ID:nL3154097]
Tesco has been lagging rivals' growth in terms of the value of sales. But in September it launched a new range of discount brands that has boosted sales volumes, which it believes will place it in a stronger position as food price inflation ebbs. (Reporting by Mark Potter; editing by Simon Jessop and Carol Bishopric)