Britain's biggest supermarket group Tesco (TSCO.L) will hike the price it pays for all its fresh milk for a second time in three months as suppliers battle unprecedented levels of on-farm inflation, it said on Friday.
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A British Friesian cow waits to be milked at Pikehall Farm near Matlock, Britain, January 28, 2021. REUTERS/Phil Noble

The group, which has an over 27% share of Britain’s grocery market, said the more than 500 British dairy farmers that make up the Tesco Sustainable Dairy Group (TSDG) will see the retailer pay them 46 pence per litre from July 1, up from 41.59 pence per litre.

The rise, which follows a near 20% increase in May, reflects the soaring cost of feed, fuel and fertiliser that dairy farmers are having to endure. Tesco did not say what the implications would be for the price that shoppers pay for milk.

Several of Tesco’s own brand milk lines, including four-pint variants, are covered by a scheme which matches the prices of German-owned discounter Aldi.

Last month market researcher Kantar said grocery price inflation hit 7.0% in the four weeks to May 15, its highest level in 13 years.

A recent report released by the International Dairy Federation says that total dairy consumption globally will increase by 24 per cent by 2031, or an increase of 1.7 per cent per year.

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