Tesco Slashes Milk Prices as Wholesale Costs Drop!
Tesco, the largest grocery store in Britain, has taken a unique step by reducing the price of its milk for the first time since May 2020, signaling a possible easing of weekly store price rises. The price of a 4 pint bottle of milk will be lowered from £1.65 to £1.55, while a 2 pint bottle will see a 5p reduction to £1.25, and a single pint will also decrease by the same amount to 90p.
The decision to lower milk prices comes as Tesco stated that its costs for purchasing milk from suppliers had fallen, and the savings would be passed on directly to customers. In recent months, the cost of a weekly grocery shop for families has been on the rise, with food inflation reaching 18.2% in the year to February, the highest since 1978. Milk prices alone have increased by an average of 43% from February 2022 to February this year, along with other staples like cheese and eggs, putting a squeeze on household budgets.
Jason Tarry, Tesco's UK and Ireland boss, assured that the reduction in milk prices would not affect the amount the supermarket pays to its farmers. He stated, "We've seen some price deflation for milk across the market in recent times, and we want to take this opportunity to pass that discount directly to customers."
Laith Khalaf, head of investment analysis at AJ Bell, sees Tesco's move as a glimmer of hope for consumers amidst the inflationary challenges. He commented, "It also shows that the UK's fiercely competitive supermarket sector is not simply going to cash in on profits as wholesale prices fall because there's always a competitor waiting in the wings to do some undercutting."
In addition to lowering milk prices, Tesco has also announced that it will be "locking in" prices on over 1,000 everyday products until July 5th, including popular items like Yorkshire Tea, chips, and Shredded Wheat. Sainsbury's, a rival supermarket, has also recently introduced lower prices on hundreds of products for members of its loyalty Nectar card, which competes with Tesco's Clubcard in rewarding shoppers with deals.
These changes by major supermarkets come as new figures reveal that consumers are cutting back on groceries and dining out due to concerns about rising food prices. A recent report by Barclays showed that 9 out of 10 customers are worried about increasing food costs, with 62% actively finding ways to reduce their weekly shopping expenses. This move by Tesco to lower milk prices and lock in prices on other products may provide some relief for consumers who have been grappling with rising prices and tightening budgets in recent months.