Taking advantage of an increase in supply that occurred in the spring despite weak demand, Sainsbury has followed Tesco by slashing the price of milk by 5p a pint.
The UK’s biggest supermarket, Tesco, has slashed the price by 10p for the first time since 2020; thus, each pint of milk costs 90p or £1.55 for four pints.
In an attempt to win over price-conscious shoppers with deals on popular items, Sainsbury’s instantly followed Tesco’s lead on Thursday.
Tesco stated on Thursday that such price cuts raise hopes of slowing down food inflation. Continuing further, it said that although the price of proteins and rice continues to rise, there has been a drop in the price of grains and cooking oils.
A Sainsbury’s spokesperson stated: “With costs going up, we are working hard to keep prices low, especially on the everyday essentials people buy the most.”
Industry insiders revealed that the reduction in the retail price came to 5p since there has been a boom in cow milk production when they are let out in the fields, so the large wholesalers reduced their prices.
The Agriculture and Horticulture Development Board’s (AHDB) recent report stated that while the UK milking herd shrank by less than 1% in January compared to a year earlier, it was the smallest fall since 2018, and dairy farm yields had grown in the autumn in part due to better prices paid to farmers last year.
As demand slowed, supply constraints began to loosen.
As the cost of a basket of groceries increased, several consumers switched from higher-priced brands to cheaper ones. Oat or almond milk has also become popular as an alternative dairy product.
The National Farmers’ Union is anticipating a further reduction in milk prices in supermarkets. According to the Office for National Statistics, the price will fall from 48p per liter in February to 40p per liter the following month.
In recent months, the prices of global energy and commodities have fallen; nevertheless, the NFU’s Dairy Board chair, Michael Oakes, is expecting a “challenging springtime” for dairy farmers because the price received is less than the cost of production.
A spokesperson for the UK’s biggest dairy processor, Arla, stated that “the cost of living squeeze means consumers are putting less in their baskets, so demand is changing. At the same time, milk supply is growing, creating a change in the supply and demand of milk which is having a negative impact on the global value of milk.”
“This is reflected across the dairy industry in the price being paid out to farmers. We are doing all we can to continue supporting our owners as costs remain high and ensure we keep milk on the supermarket shelves.”
Per the Office for National Statistics (ONS), prices of milk and dairy products spearheaded the food price inflation that surged 18% last month, so the price cut initiated by the supermarket is a welcome relief for price-conscious consumers. Although the price of milk was £1.15 for four pints just a year ago, even with the latest price cut, Tesco and Sainsbury’s are imposing a third more.
According to the official statistics, the inflation rate for milk, cheese, and eggs hit 31% in the year that ended in January, the highest annual increase since comparable records began in 1989. According to data going back to 1970, the wholesale price farmers were paid increased to 51.5 pence per liter in December, which is the highest amount ever.
The ONS estimates that before additional price reductions were announced, prices had dropped back by a little over 7% since that time, to roughly 48p per liter in February.
- Published By Team Timeswire