Britain’s biggest supermarket group Tesco has cut the price of milk for the first time since May 2020, a possible early sign that a surge in food inflation may abate in the coming months.
In March, grocery inflation rose to a record 17.5%, according to market researcher Kantar, with prices rising fastest for products such as milk, cheese and eggs. Overall UK inflation for food and non-alcoholic drinks was 18% in February, the highest since 1977, according to official data.
Tesco, which has a 27% share of Britain’s grocery market, said on Wednesday it was reducing the price of a four-pint carton of milk from 1.65 pounds ($2.05) to 1.55 pounds, two pints from 1.30 pounds to 1.25 pounds and a pint from 95 pence to 90 pence.
“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,” Tesco UK CEO Jason Tarry said.
He said the price cut would not affect the price Tesco pays its milk farmers.
Tesco also said it was “locking in” prices on over 1,000 everyday products until July 5, including Yorkshire Tea, McCain oven chips, Shredded Wheat, Kenco instant coffee and Aquafresh toothpaste.
Overall UK consumer price inflation ran at 10.4% in February, official data showed, pushed up by higher food and drink prices in pubs and restaurants.
The Bank of England forecasts it will fall sharply during the current quarter, dropping to below 4% by the end of this year.
Tesco will report full year results on Thursday.
($1 = 0.8053 pounds)
Source : Reuters April 12th 2023 -Reporting by James Davey; Editing by Bernadette Baum