Morrisons cuts prices on 130 grocery staples like milk, eggs

LONDON (Reuters) - British grocer Morrisons said on Monday it had cut prices on items like milk, cheese and cornflakes in the latest salvo in a supermarket price war.

Morrisons, the smallest of Britain's "Big Four" supermarket chains, said it was reducing the price of 130 shopping basket staples by an average of 22 percent.

The price war and lower commodity prices pushed food prices down 1.9 percent in December, their biggest fall since June 2002.

Britain's largest supermarkets - Tesco, Wal-Mart owned Asda, and J Sainsbury - have been cutting prices on essentials to compete with discount grocers Aldi and Lidl.

The fall in grocery bills has coincided with a steep drop in the oil price, resulting in the annual rate inflation halving to 0.5 percent in December from 1.0 percent in November.

Morrisons said four pints of milk had been cut to 1.00 pound, from 1.39, for example, while the price of 500 grammes of Kellogg's cornflakes was reduced by a quarter to 1.09 pounds.

(Reporting by Paul Sandle; editing by Susan Thomas)