Butter prices start to fall after wholesale milk prices ease

The price of own-label butter is starting to fall, according to The Grocer’s analysis of Assosia data.

Eight own-label lines have seen price drops over the past four weeks across Asda, Morrisons, Sainsbury’s, Tesco and Waitrose.

Standout fallers included a Sainsbury’s Salted British Butter line (500g), which saw a price drop of 20p (or 6%) to £3.35.

Sainsbury’s, Morrisons and Tesco 250g own label butter lines also fell in price, by 10p (or again 6%) to £1.69, according to Assosia data for The Grocer’s Key Value Items tracker (below).

It also showed the price of butter, based on 34 lines available in the mults, had seen an average price drop of 10.9% year on year.

However, branded lines are still seeing inflationary price moves.

The average branded butter line has seen prices rise by 3% during the past four weeks. The Assosia data shows there have been 28 price rises across branded butter in the four weeks to 31 October, compared with 12 price drops.

It comes amid growing evidence retail butter prices are now following milk prices downwards, following a prolonged period of inflation caused by record high farmgate prices, according to Grace Randall, retail insight manager at AHDB.

Commodity bulk butter prices rose from £3,780/tonne in October 2021 to a high of £6,020 in June 2022, before falling to £4,070 in October 2023, according to AHDB data.

Meanwhile, the wholesale price of butter is down 4.6% in the 12 weeks to 7 October 2023, from £5.68 to £5.42 per kg. And the average UK farmgate milk price has fallen from a high of 51.60 ppl in December 2022 to 36.22 ppl in August 2023 [Defra].

These factors have subsequently helped contribute to a fall in the RPI price of a 250g of block butter by 3.6%, from 223 pence in September 2022 to 215 pence in September 2023, according to the ONS.

Butter products have been one of the key targets for supermarket price cuts – after Sainsbury’s triggered a series of retailer price cuts on bread and butter in May. At the time, the retailer said it was passing savings on to customers after a fall in prices paid to suppliers.

Source : The Grocer UK Nov 1st 2023 by Lilith Foster-Collins