Asda, Aldi and Lidl have followed in the footsteps of supermarket rivals Tesco and Sainsbury’s by slashing the price of their own-brand milk by 5p.
The retailers have joined in the dairy wars by cutting the price of a pint of milk to 90p, down from 95p, the latest move in the ongoing battle to help win over shoppers looking to keep costs low.
Tesco was the first major grocer to cut the price of milk earlier this week, when it reduced the cost of a pint for the first time since May 2020 as it extended its price lock on over 1,000 products to help consumers struggling with higher living costs.
Sainsbury’s was quick to follow just 24 hours later, matching Tesco’s new lower prices exactly. Aldi, Lidl and Asda all dropped their prices towards the end of the week, with Asda saying it had taken “swift action” to support customers struggling with the cost of living.
How much is a pint of milk?
The question that was once a reliable indicator of how out of touch a person is with the rest of society has been rendered almost completely redundant over the last two years.
With prices changing on an almost monthly basis, the only acceptable answer now is “more expensive than ever, obviously”.
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Supply issues, coupled with food price inflation climbing steadily upwards and now sitting comfortably above 18%, have led to unprecedented price increases. Milk is one of the many essential household staples – along with cheese, butter and eggs – which have risen dramatically in price over the past two years, squeezing household budgets and putting consumers under increasing pressure.
However, in the wake of this week’s cuts, a pint of own-brand milk now costs just 90p, with four-pint own brand bottles dropping by 10p from £1.65 to £1.55. Two-pint bottles of milk will now typically cost £1.25.
So while the price of dairy products has soared – with Iceland’s Richard Walker predicting a pint of milk would reach £1 late last year – the market is beginning to stabilise as high dairy production costs begin to climb back down.
However, the new ‘lower’ prices remain more than double the average price before Covid, when a pint of milk typically cost around 43p.
Are supermarkets doing enough?
Announcing the initial price cuts, Tesco boss Jason Tarry described milk as a “key everyday staple for so many families”.
“We’ve seen some cost price deflation for milk across the market in recent times, and we want to take this opportunity to pass that reduction on to customers,” he added.
Asda’s chief commercial officer Kris Comerford said the retailer had “invested to protect our customers throughout the cost of living crisis and [has] taken swift action to reduce the price of milk” as commodity prices have eased, on top of the “hundreds of prices lowered in our stores every week”.
In a similar vein, Sainsbury’s said: “With costs going up, we are working hard to keep prices low, especially on the everyday essentials people buy the most.”
But with costs elsewhere continuing to rise, and Asda’s latest income tracker showing over 11 million families in the UK don’t have enough income to cover their weekly expenses, 5p off a pint of milk is unlikely to make a significant difference to households already feeling the pinch.
Consumer group Which? believes supermarkets should be doing “a lot more to ensure healthy, nutritious food is more widely available”.
Head of food policy Sue Davies said: “Any price reduction is good news for consumers, but 5p off a pint of milk won’t make a huge difference when it comes to year-on-year food price inflation, which is almost 25% at some supermarkets, according to our research.
“This step shows that pressures are easing but supermarkets should be doing a lot more to ensure healthy, nutritious food is more widely available, especially in those areas most in need and to make sure pricing is clearer, more transparent and more consistent, so consumers can easily compare prices in-store and with other supermarkets.”
Why are prices dropping now?
According to Arla, the UK’s largest dairy producer, the latest round of retail price reductions are a result of large dairy wholesalers cutting their prices by 5p a litre, as demand has dropped at the same time that cows typically produce more milk, leading to oversupply.
With energy and material prices also beginning to level out, The National Farmers’ Union (NFU) has predicted that wholesale prices will fall even further next month, pointing to the possibility of retailers passing on further price reductions.
Chair of the NFU’s Dairy Board, Michael Oakes, has predicted a “challenging springtime” for dairy farmers as the price retailers pay per pint is likely to fall below the cost of production.
As it drops its on-shelf price, Tesco has renewed its commitment to the nearly 500 British dairy farmers who supply its stores, reiterating that they will continue to be paid a price that reflects the cost of production. Tesco says the price it pays farmers for milk is not linked to the prices consumer pay in stores.
“Our Tesco Sustainable Dairy Group was set up to ensure that farmers across the UK get a fair, independently-set price for the milk they produce for us,” Tarry added.
“Our model gives farmers security when the market price for milk falls below the cost of production and reflects our long-standing commitment to our farmers.”
Sainsbury’s has also confirmed that changes to on-shelf milk prices will not affect the amount famers are paid, with its with Dairy Development Group protecting them against price cuts in the market.
A spokeswoman for Lidl also said that this latest price cut would not impact dairy farmers.
