Retail competition drives down shelf milk prices

Milk price inflation fell to -1.7% in July, according to the latest data from the Office for National Statistics, with competition between retailers driving down prices.

Since March, a string of retail price cuts meant most retailers were now selling milk at £1 for four pints, with an average of £1.14, according to ESA Retail.

See also: Sainsbury’s cuts development group milk price by 0.62p/litre

In contrast, butter had seen consistent price inflation, at 7.2% in July – the highest inflation of all food products barring fresh fish.

“As a whole, UK food inflation eased to -0.1% in July, down from 3.8% a year ago,” said a report by DairyCo.

“This negative inflation is restraining overall growth of the market, and is particularly prominent in the liquid milk sector.”

The Food and Agricultural Organisation global food price index fell for the fifth consecutive month in August, to 196.6 points – its lowest point since September 2010. Dairy prices dropped by 11% on the month, to 200.8 points – the largest month-on month decrease for six years. “The supply response to lower milk prices will be a key driver of wholesale price movements over the coming months.”

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