The Washington supermarket price war has produced the sharpest drop in local grocery store food prices in the 28 years that records have been kept.

Food prices plunged 2.7 percent during April in the Washington area, the Labor Department reported yesterday. Meat, poultry and fish bills dropped the most, 6.4 percent.

The dramatic decline here occurred while food prices were holding steady nationwide.

Supermarket executives said yesterday the government figures show the impact of a food price war that began April 5, when Giant Food Inc. stopped marking prices on individual items. To ward off any consumer backlash, Giant coupled the end to item pricing to a series of massive price cuts it called "warehouse pricing."

The day that Giant advertised its move, Safeway retaliated with its own markdowns and the rest of the food stores quickly joined the fray.

"I'm certain the large decline reflects the institution of Giant's warehouse pricing which forced the others to follow suit," Giant spokesman Barry Scheer said yesterday.

"I don't think there's any question," agreed Safeway spokesman Ernie Moore. "It shows the extremely competitive position the retail grocery business is in right now."

Also helping food prices is an oversupply of beef and pork, which resulted in a nationwide decline of about 1 percent in meat prices last month.

But in Washington, meat and fish prices were down by more than 6 percent, indicating the local supermarkets are taking advantage of lower wholesale prices to offer conspicuous price cuts to their customers.

Consumers usually buy more meat when prices come down and the supermarkets apparently have made meat a major weapon in their price war.

The Labor Department food price index report showed cereal and bakery product prices were down about 0.5 percent, dairy products down 0.1 percent and fruits and vegetables cheaper by 0.2 percent.

The Labor Department food price index report showed cereal and bakery product prices were down about 0.5 percent, dairy products down 0.1 percent and fruits and vegetables cheaper by 0.2 percent.

Prices for what the government survey labels "other foods" dropped 0.5 percent, dairy products down 0.1 percent and fruits and vegetables cheaper by 0.2 percent.

Prices for what the government survey labels "other foods" dropped 2.2 percent. That category includes everything from potato chips to TV dinners.

Supermarket spokesmen said their price cuts have been concentrated on staples rather than prepared convenience foods.

The local supermarket war has been under way for seven weeks now and the question for most consumers is how long it will continue. "We look at it as a long-term program," Moore added, predicting prices will stay low for some time.

But the price war is already having a serious impact on Giant's profits, a development that could lead to gradual increases in prices.

Giant took the unusual step this week of announcing in advance that it will report "substantially depressed" profits when it issues its financial report for the first quarter next month.

Giant said, however, that its sales are running 16 percent ahead of last year. Giant was shooting for increased sales when it announced the price cuts. Giant claims it can offer lower prices because all its stores are equipped with computer scanners that "read" product labels and ring up the price automatically.

Leaving the prices off individual items saves the company some money, but Giant is counting on making up for the price cuts with higher volume.

Safeway's Moore said that company's sales are also increasing, "but I can't tell you how much."

Between them, Giant and Safeway ring up more than 60 cents out of every dollar spent on food in Washington area supermarkets. In the last month, Giant has increased its share from 33 percent to 34 percent, estimates Jeffrey Metzger, editor of Food World, a local business paper. Safeway has about 27 percent of the business, he estimates.