By Jonathan Davies

Iceland has reported a 4.4% fall in like-for-like sales as it warned of an "exceptionally challenging" year for supermarkets.

The frozen foods retailer said it was hit with a triple whammy of food price deflation, greater competition on prices and changing shopping habits.

Ordinarily, even a 1% fall in annual like-for-like sales is considered a large number for supermarkets. But the 4.4% fall resulted in Iceland reporting profits of £150 million, from from £200m in the previous year.

Last year, chief executive Malcolm Walker led a charge to reduce prices on around 800 products, but to also improve quality. Iceland also changed the format of its stores, upgraded its packaging and introduced online shopping across the UK.

Mr Walker said: “This has been an exceptionally challenging year for the group, and for the UK food retailing industry as a whole. In the face of food price deflation, intense competition and significant change in consumers’ shopping habits.”