LONDON (Reuters) -Britain is not in the midst of a supermarket price war despite some suggestions to the contrary, the boss of the UK arm of German discounter Aldi said, warning rivals his business still had "huge potential" for growth.

In March, Asda, Britain's third largest grocer, boosted speculation of a price war, saying it would take a hit to profits to finance a campaign of price cuts aimed at reversing a slide in market share.

The warning hit the shares of industry leader Tesco ( TSCDF ) and number two Sainsbury's ( JSNSF ), which took account of Asda's move in their profit outlooks.

But Giles Hurley, chief executive of Aldi UK, the number four player, said on Thursday there had been "more talk than substance".

"There has been a lot of talk about a price war, I don't think that has manifested itself," he told Reuters in an interview, pointing to industry data showing grocery inflation hitting 4.1% in May, a 15-month high.

"I'd probably call it more of a phoney price war than a real price war," Hurley said, maintaining that Aldi's price gap to rivals "is as big as it's ever been".

Data from market researcher Kantar published on Wednesday showed Aldi UK's sales rose 6.7% over the 12 weeks to May 18, its fastest growth since the start of 2024, with its market share hitting a record 11.1%, up 30 basis points year-on-year.

Aldi UK, owned by Germany's Aldi Sud, and rival discounter Lidl GB have expanded rapidly over the past two decades, transforming the supermarket scene.

Aldi UK now has Asda, which has a 12.1% market share, in its sights, with the Kantar data showing Aldi now sells more food and drink than Asda.

"While I'm delighted with the growth that we have, there's massive headroom for us," said Hurley.

He said the group, which currently trades from 1,050 stores, would invest 650 million pounds ($875 million) this year opening 40 stores and refreshing existing ones. A further 40 openings are planned for 2026 and its long-term target is 1,500.

($1 = 0.7427 pounds)