Major supermarkets announced a new round of price cuts in a bid to lure struggling consumers.
Both Asda and Tesco promised lower prices over coming days to outflank their rivals.
Asda yesterday unveiled a range of goods, including two pints of milk, for sale over the weekend at 50p.
The retailer said customers would be able to buy milk at its cheapest price since 2001 following increases of about 21% in the last year.
Other 50p products include bread and butter, eggs, meat and vegetables.
The price cuts are in effect from today to Sunday.
Suppliers would not be affected by the reductions, Asda said.
Asda trading director Darren Blackhurst said: "Customers are telling us this is the time of the month they're really starting to feel the pinch and that's why we're investing in price cuts where they really count, on everyday essentials like milk, bread and butter, meat and vegetables."
Tesco also cut the cost of 18,000 products in its biggest weekly promotion yet.
The retailer said it was reducing the price of a range of everyday goods that would be on promotion, from bread, sausages and pizzas to Back to School uniforms and homewares.
Tesco said the move meant it had cut £620 million from prices since January.
Tesco commercial director Richard Brasher said: "Rising costs continue to hit customers hard and they are looking to Tesco to help.
"Despite clear inflation in some food products we have worked hard to cut our prices week after week and negotiated some fantastic deals with our suppliers to bring shopping bills down."
Soaring food prices have pushed the official inflation rate up from 3.8% to 4.4% in July - a 16-year high.
Increases in the price of meat products, milk, cheese and eggs have contributed to a steep climb in the cost of living.
The average grocery bill for a typical family has climbed by more than a quarter to £127 since last summer, according to price comparison website Mysupermarket.co.uk.
The fierce price wars among retailers follows the rising popularity of discount stores like Aldi and Lidl.