Supermarkets are raising the cost of milk as a dairy shortage hits supplies — but a pint is still cheaper than bottled water.
By: Andrew Ellson
Source: The Times
Morrisons has responded to soaring prices at the farm gate by raising the price of four-pint bottles from £1 to £1.10.
Industry experts say other supermarket chains are highly likely to follow.
The move was welcomed by Michael Oakes, dairy board chairman of the National Farmers’ Union, who said the new price was closer to “reflecting the true cost of milk production”.
However, milk remains cheaper to buy than bottled water. At Tesco, a pint costs 45p or 79.2p a litre. At the same supermarket a 500ml bottle of Highland Spring costs 50p or 100p a litre, making it 26 per cent more expensive.
Morrisons’ decision to increase prices follows a sustained period of tight supply from dairies that has also sent the price of butter higher.
Although average milk deliveries have risen in recent months, up 2.5 per cent, they are still nearly six per cent down on last year. At the same time, the average farm gate price among smaller suppliers rose 44 per cent.
Supply has been restricted because many dairies have closed following a brutal price war started by the supermarkets in 2014. It came just as global demand for dairy products began rising, with consumers in China adopting more western diets.
Milk prices have risen much more slowly than most other food or drinks over the past few decades. Thirty five years ago a pint of milk cost 17p and has risen to 46p on average, a 170 per cent increase. Over the same period inflation generally has risen 230 per cent and the price of a pint of beer has jumped 375 per cent.
A spokesman for Morrisons said it had tried to hold milk prices down, but “needed to respond when there were ongoing cost pressures”.
The rise comes two months after Morrisons increased its support for British dairy farmers with a new dedicated milk supply group, welfare commitments and a pledge that only UK farmers would benefit from the 10p a litre premium paid from its Milk for Farmers range.
Some smaller supermarket chains such as the Co-operative already charge up to £1.47 for four pints of milk.