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.

J Sainsbury Plc expects profits to be little changed this year as higher costs and intense competition put pressure on supermarket groups.