Supermarket giant Asda has slashed its mobile phone tariffs in a bid to claim the title of the cheapest pay-as-you-go provider in Britain.

The retail chain has just announced that it will cut its flat-rate calls in half, from 16p to 8p, with the price of texts falling from 5p to 4p, from the first day of September.

Ikea’s Family Mobile, offers its customers 9p per min and 5p per text message. Ikea used to be the cheapest until Asda came along with its offer!

The price-cutting competition is in stark contrast to the trend of specialist network operators raising their charges and tariffs. Next month Vodafone will hike its minimum call charge for PAYG customers by around 30 per cent, from 15p to 20p.

O2, T-Mobile and Orange have made similar moves but they shouldn’t be worried by supermarkets lowering their prices – retail chains all use the big networks to offer their services (Asda takes minutes from Vodafone).

Craig Thirkell, manager at Asda Mobile, said: “We’ve been working on this phone offer since we saw the downturn in the economy. We wanted to offer a transparent tariff with no hidden costs as customers are strapped for cash.”

Price comparison website uSwitch.com told The Times that Asda could still make a profit of 6p per minute from calls to landlines and supported its claim to offer the cheapest flat rate in Britain.