Asda has slashed the price of milk to its lowest level since 2001 as supermarkets step up their price war to lure cash-strapped shoppers.

Shoppers this weekend will be able to buy two pints of milk for just 50p. But the retailer insisted farmgate prices would not be cut to pay for the promotion.

It said milk had been one of the core grocery products hit hardest by inflation, with the retail price going up by around 21% in the last year.

Farm input costs

Spiralling food prices are being blamed for the biggest leap in annual inflation since 1997.

But the high cost of food is being outstripped by farm input costs which have soared by 30% in the past year.

The Asda reduction affects whole, semi-skimmed and skimmed fresh milk where the price of two pints is being slashed from 80p to 50p - a saving of 38%.

Costs

It will be available in all stores from Friday to Sunday (15-17 August) inclusive.

Asda typically sells almost ten million pints of own label fresh milk each weekend, so the move will cost the retailer more than £1 million.

"Customers can cash in on the offers safe in the knowledge that ASDA is footing the bill and costs will not be passed on to suppliers," it said.

The move follows a decision by Tesco to sell "Fresh'n'Lo" milk at a 10p/litre discount to its own-branded standard milk.

Prices slashed

Asda is also slashing the price of a basket of core products to 50p this weekend, including bread and butter, eggs, meat and vegetables.

It billed the promotion as an "ongoing bid to help customers cut the cost of the weekly shop at the time of the month they need it most".

Asda sources its fresh milk directly from a dedicated group of 550 British dairy farmers. It last increased the farmgate milk in June 2008 to 27p per litre.