Government urged to set up retail watchdog.

The Government is being urged to speed up plans for a retail watchdog amid fears that farmers will bear the brunt of a supermarket price war.

The four big retailers, Asda, Tesco, Sainsbury's and Morrisons, started the New Year by slashing more than £1bn off shopping bills.  In its most agressive marketing campaign to date, Asda pledged to be 10% cheaper than its rivals.

Dairy farmers are on the front line as milk is increasingly sold for less than water in many supermarkets, with a pint costing as little as 25p when bought in multiple four-pint cartons.  This is half the price of bottled spring water at Tesco stores.

Farm leaders fear the supermarket giants will heap pressure on suppliers as they seek to cushion consumers from the impact of food price inflation, which stood at 4% in December and shows little sign of easing.

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