Tesco has slashed the price of its milk for the first time since May 2020, in a possible sign that price increases for a weekly shop could be starting to ease.
Britain’s biggest supermarket said it will reduce its four-pin bottle from £1.65 to £1.55 from Wednesday.
Two pints will be reduced by 5p £1.25 and a single pint will also fall by the same amount to 90p.
Tesco said its cost of buying milk had come down so it decided to “pass that reduction on to customers”.
The price of a week’s shopping for households has risen in recent months. The latest official figures show that food inflation in particular rose by 18.2% in February – the highest since 1978.
The price of milk itself has increased by an average of 43% from February 2022 to February this year. It’s one of many staples, including cheese and eggs, that have risen in cost and weighed on household budgets.
- Why are prices rising so much?
Jason Tarry, Tesco UK and Ireland boss, said the supermarket’s cuts in milk prices “won’t affect the price it pays its farmers”.
“We’ve seen some deflation in milk cost prices across the market lately and we want to take this opportunity to pass that reduction on to customers,” he said.
Laith Khalaf, head of investment analysis at AJ Bell, said while the price cut applied to just a single product, Tesco’s decision was “a light at the end of the inflation tunnel for consumers”.
“It also suggests that the UK’s highly competitive supermarket sector will not simply reap profits when wholesale costs fall because there is always a competitor waiting to undercut something,” he added.
Bigger supermarkets like Tesco, Asda and Sainsbury’s have to constantly monitor their prices in the face of stiff competition from discounters Aldi and Lidl.
Mr Khalaf said that after a year of price increases and interest rate hikes that hit household finances, some “good financial news is long overdue”.
As well as slashing milk prices, Tesco has ‘fixed’ the prices of over 1,000 essential products until July 5, including Yorkshire tea, crisps and grist.
Sainsbury’s announced on Monday that it is introducing lower prices on hundreds of products for members of its Nectar loyalty card.
The loyalty program competes with Tesco’s Clubcard, which rewards members with offers when they shop.
The shakeup from competing supermarkets comes as new figures showed people had scaled back groceries and eating out spending in March, with nine in 10 shoppers saying they were concerned about rising food prices, according to Barclays.
Around 62% said they are finding ways to reduce the cost of their weekly grocery shopping, a report shows.
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