Giant Foods, citing the impact of its voluntary price freeze, yesterday predicted a sharp drop in earning for the second quarter.

Company officials, in an interview with the Dow Jones news service, said net income for the quarter ending Aug. 9 would be "substantially below" the $3.5 million (70 cents a share) reported for the same period last year despite a 17 percent increase in sales for the quarter.

Giant Chairman Israel Cohen blamed much of the earnings loss on the company's voluntary 120-day price freeze. The freeze, which ended Aug. 2, was adopted at the urging of the White House as part of the president's anti-inflation program.

Cohen said, however, that Giant was willing to "sacrifice" short-term earnings to gain a long-term increase in volume. "Volume, that's the only way that a supermarket chain can grow," Cohen said.

Cohen added that Giant was not planning any further price freezes. "It's just not prudent for the company," Cohen said, citing the impact of this year's severe drought on future food prices.

Giant officials said the company plans to maintain its dividend payment despite the drop in earnings, but indicated there would be no dividend increase at least until the end of the fiscal year. Officials said, however, they were doubtful dividends would be increased even then.

David Sykes, senior vice president for finance, said that for the 24-week first half Giant will report that net income dropped "substantially" from the $7.8 million ($1.57) for the first half of last year. He said sales for the period would be about $650 million compared to sales of $542 million.

Sykes said sales for the year ending Feb. 21, 1981 were expected to be about $1.4 billion compared to $1.2 billion last year would be down but declined to predict the size of the drop. Last year, Giant reported net income of $17.9 million ($3.64).