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Pound shops fighting to last penny

16 May 2013 Last updated at 05:42 BST

A High Street turf war has broken out between pound shops, undercutting each other in a bid to win bargain-hungry shoppers.

Shops which advertised all products at a cost of £1 have faced stiff competition from "99p stores" and now shops selling items for 97p are emerging.

But how low can prices go and what does the trend tell us about how we shop?

Newsnight's Stephen Smith reports.