Sainsbury's has forecast that shop profits will flatline or fall in the coming year as the supermarket sector gears up for a price war. The retailer said it expects income to dip to £1bn as it continues to invest in lowering grocery prices.

Sainsbury's , Britain's second largest food retailer after Tesco , forecast flat profit this year as it pledged to sustain its competitive edge if a price war emerges.

Supermarket giant Sainsbury’s joined its arch rival Tesco today in declaring that it will sacrifice profits this year to see off the threat from an aggressively price cutting Asda.