Sainsbury's has forecast that shop profits will flatline or fall in the coming year as the supermarket sector prepares for a possible 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.

Sainsbury's expects its income to fall by £1bn this year as it ramps up investment in lowering grocery prices for shoppers.