Sainsbury’s is slashing 2,000 jobs in an attempt to cut costs by £500m as the grocer struggles with the return of food inflation and rising wage bills.

The supermarket – which acquired Argos last year – has launched a radical staffing overhaul that will result in 1,400 payroll and human resources jobs being scrapped.

It is also restructuring its human resources functions at its banking arm and at Argos, which could lead to a further 600 job losses.

Earlier this year, Sainsbury’s drafted in McKinsey to devise a staff reduction plan. It was speculated that the grocer would reduce staff numbers by around 1,000 to meet its cost cutting targets, but a final number was not confirmed.

It also cut 400 jobs in March and warned 4,000 employees that changes would be made to their working hours in a shake-up at 140 stores.

Outside of its stores, the grocer currently employs 3,000 staff spread across its head office in London, a separate human resources centre in Manchester, an IT unit in Coventry and a banking division in Edinburgh.

The cuts come as supermarkets struggle to compete in the heated price war spearheaded by discounters Aldi and Lidl. 

Sainsbury’s and its rivals are also grappling with rising costs related to the slumped pound, the Living Wage and the apprenticeship levy, which is thought to have sent its staffing bill soaring.

A Sainsbury’s spokesman said: “The UK grocery market is changing at a rapid pace and it’s crucial that we transform the way we operate to meet future challenges and continue to provide customers with best in class service.

“Following a comprehensive review, we are proposing some updates to our HR structures and systems, as well as changes to a number of other support roles, subject to consultation.”

Sainsbury’s follows Tesco and Asda in making cuts to its back office staff.

In June, Britain’s biggest retailer Tesco said it would make 1,200 head office redundancies, just one week after it cut 1,100 jobs at a Cardiff call centre.

Asda is cutting 300 roles from its central operations across Asda House in Leeds and George House in Leicester, and has begun consultation with 3,257 workers in 18 of its underperforming stores as it too battles to cut costs.