Prices in UK supermarkets are likely to fall further this year as competition gets tougher.

Retail analyst Verdict said today [Monday] that the nation's household grocery bill could drop by as much as £1bn (US$1.86bn), with the anticipated acquisition of Safeway by William Morrison the key driver of a downward price trend.

Sainsbury's has already said it will slash prices in the summer to entice customers into its stores, and other sector players are likely to respond in kind.

Verdict expects to see core grocery prices fall by 1% in 2004, having risen by an estimated 0.9% in 2003, reports Reuters.