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Tuesday, Aug 05, 2025

Tesco cuts milk prices after wholesale costs fall

Tesco cuts milk prices after wholesale costs fall

Tesco has cut the price of its milk for the first time since May 2020, in a possible sign that price rises for a weekly shop could be starting to ease.

Britain's largest supermarket said it would reduce its four pint bottle from £1.65 to £1.55 from Wednesday.

Two pints will be cut by 5p to £1.25 and a single pint will also drop by the same amount to 90p.

Tesco said its costs for buying in milk had fallen so it had decided to "pass that reduction on to customers".

The price of a weekly shop for households has been rising in recent months and latest official figures show that food inflation in particular was up by 18.2% in the year to February - the highest since 1978.

Milk itself has risen by 43% in price on average from February 2022 to February this year. It is one of many staples, including cheese and eggs, which have surged in cost and squeezed household budgets.

Jason Tarry, Tesco's UK and Ireland boss, said the supermarket's cuts to milk prices would "not affect" the price it pays to its farmers.

"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 said.


Laith Khalaf, head of investment analysis at AJ Bell, said while the cut in price was only to a single product, the decision by Tesco was "some light at the end of the inflationary tunnel for consumers".

"It also suggests that the UK's fiercely competitive supermarket sector isn't simply going to cash in on profits as wholesale costs fall, because there's always a competitor waiting in the wings to do some undercutting," he added.

Bigger supermarkets such as Tesco, Asda and Sainsbury's are having to constantly monitor their prices amid stiff competition from discounters Aldi and Lidl.

Mr Khalaf said that some "good financial news is long overdue" following a year of price rises and interest rate hikes which had hit household finances.

As well as reducing milk prices, Tesco said it was "locking in" prices on over 1,000 everyday products until 5 July, including Yorkshire Tea, chips, and Shredded Wheat.

Sainsbury's announced on Monday that it was introducing lower prices on hundreds of products for members of its loyalty Nectar card.

The loyalty programme rivals Tesco's Clubcard which rewards members with deals when they shop.

The shake-up by the rival supermarkets comes as new figures revealed people had cut back on groceries and eating out in March, with nine out of 10 shoppers reporting feeling concerned about rising food prices, according to Barclays.

Around 62% said they were finding ways to reduce the cost of their weekly shop, a report showed.

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