Why milk prices are set to surge: Shoppers warned they will be paying more at the supermarket – just months after Coles and Woolworths jacked prices 10 cents a litres
- The price of milk in supermarkets is likely to increase by up to 20 cents a litre
- The price rise is due to an increase in the wholesale price of milk paid to farmers
- Coles and Woolworths have not confirmed a price increase as of Saturday
- Industry experts say supermarkets are ‘unlikely’ to absorb the cost themselves
The price of milk is likely to rise in the coming weeks by as much as 20 cents a litre due to rising production costs.
Coles and Woolworths will need to pay more in wholesale prices, but are unlikely to absorb the cost themselves, and are expected to pass the higher cost on to customers.
So far, the two major grocery chains have remained tight lipped on if and when the price rise will occur.
The price of milk is likely to rise in the coming weeks by as much as 20 cents a litre as the amount farmers are paid is set to increase
AMP Capital chief economist Shane Oliver told The Herald Sun it was not likely retailers would absorb the cost, and customers could see higher prices in the next few weeks.
‘On balance I think it’s reasonable to expect some milk prices will rise in the weeks and months ahead,’ Mr Oliver said.
‘You’re talking about 10 to 20c a litre — it won’t be a huge increase. No one wants to see price rises but some of it comes down to the pressures dairy farmers are under.’
Earlier this year Coles and Woolworths added a 10 cents per litre increase to their own branded milk as dairy farmers struggled to make ends meet – but this price rise is not understood to be a charitable gesture.
‘We understand customers are facing cost of living pressures and remain committed to delivering great value to our shoppers. We deal with cost increase requests from suppliers on a case-by-case basis,’ a Woolworths spokesperson said.
Coles issued a similar statement and attributed the increase in the wholesale milk price partly to drought.
‘The wholesale price of dairy has risen over the past 12 months along with a number of other agricultural products, partly as a result of drought.
‘Coles is working with our suppliers to ensure we have the products our customers need while continuing to deliver great value,’ the supermarket said.
Earlier this year Coles and Woolworths added a 10 cents per litre increase to their own branded milk as dairy farmers struggled to make ends meet