Australian supermarkets are slashing their prices by up to 8% in a bid to battle the German discount giant Aldi, who entered the sector last month and is threatening to win over consumers. At one point, the struggling Coles Myer group dropped price tags by up to 14.2% in order to undercut its popular rival.

The discounts are largely being introduced in the stores that are situated close to an Aldi outlet, and are leading to widely fluctuating prices, both across the highly competitive sector and within the separate stores of each chain itself.

These price differences are particularly noticeable on the goods in the own label range stocked by Aldi, which competitors are most anxious to match. In the case of high-profile branded goods, which Aldi does not stock, the established supermarkets are retaining their margins.

A survey into sector prices has discovered that the cost of a basket of goods in four supermarkets near an Aldi in Bankstown has changed a remarkable 14 times since January.

The Australian council for retail studies has confirmed that come chains are even selling goods at a loss in an attempt to boost consumer loyalty.

Interestingly however, Aldi has not responded to the pressure from its rivals with a drop in its own prices; inside a “no-frills” Aldi outlet, the only concession to the supermarket war outside is the fact that a loaf of bread is down 30 cents. The survey discovered that on average, a grocery basket from Aldi now costs A$1 more than in the Australian giants’ stores nearby.