Tesco PLC (LSE:TSCO) will reduce the price of its own brand butter by €0.40 in Ireland starting tomorrow, with several other supermarkets such as Lidl and Aldi also cutting prices.
The price for 454g of butter will now cost €2.99 from the current €3.39 price.
“Following our reduction in retail milk prices in recent days, we are investing in butter retail prices to help customers with their household staple costs,” Natasha Adams, chief executive of Tesco Ireland said.
Tesco reduced the price of two litres of milk in Ireland by ten cents last week after having dropped the same product by five pence in the UK earlier in April.
The reduction comes after UK food and beverage inflation for March reached 17.5%, following nine months of consecutive double-digit hikes.
The recent surge in prices has left some confused as it directly opposes research by the FAO world food price index which indicated that international dairy prices dropped 0.8% in March, having fallen all of 2023.
Senior economist of the Food and Agriculture Organisation of the United Nations, Upali Galketi Aratchilage, revealed to Proactive that wholesale dairy prices in the UK had also been falling and that pressure was mounting for retailers to drop prices.
“I have seen that in the recent past wholesale prices for dairy products such as butter, cheddar and skim milk powder have begun falling, but retail prices have remained relatively flat,” he said.
He noted that one key driver for the increase in prices could be that companies entered into high-priced contracts when the cost-of-living crisis began, in the hope of limiting soaring input expenses.
“I guess that retail prices will begin to come down, with a delay we usually observe, as soon as all value chain actors in the dairy sector settle down to the declining input costs and seasonally rising milk production in the UK,” Galketi Aratchilage added.
Tesco has not confirmed whether the price reductions in Ireland would be matched in the UK.