The opening shot was fired by pub group JD Wetherspoon which said it would introduce a new national price list on 23 drinks from Monday. The pubs will be offering Boddington's at pounds 1.29 a pint, Carling at pounds 1.49 a pint and Coca Cola at 90p. Prices will also be cut on other beers including John Smith's and Stella Artois.
Rival pub group Yates Wine Lodges immediately responded when it cut the price of a pint of Boddington's to pounds 1.10 nationwide. Carling will be priced at pounds 1.35 while a glass of house wine will be pounds 1.45.
Yates said its "Value Offer" will apply everywhere in the country while Wetherspoon's deal excludes pubs in central London and at airports. However, the Yates offer only applies between 3pm and 8pm.
JD Wetherspoon said it was able to cut its prices after re-negotiating its beer supply agreements. Tim Martin, chairman, said he planned to make the offer available "permanently". He said beer drinkers currently faced paying prices up to 10-20 per cent higher in city centres than they would a couple of miles out of town.
Yates's marketing director Julie Brook said: "Why should Londoners pay more for the same drink than our customers in Liverpool or Leeds? If you go into a Marks & Spencer you pay the same price for the same jumper or sandwich anywhere in the country. Why should pubs be any different?"
Wetherspoon's campaign came as the rapidly expanding pub group announced a 30 per cent rise in full year profits to pounds 26.2m. It opened 84 pubs in the year, taking its total to 327. Mr Martin said he saw scope for 1,200 to 1,500 Wetherspoon's pubs, with lots of opportunities for new pubs on sites formerly occupied by banks and high street supermarkets.
Underlying sales in August were helped by good weather and were up by 19 per cent. The shares closed 16p higher at a new high of 350.5p.