Milk slashed by 25p a pint as supermarkets start new price war

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Asda said it was cutting the price of a two-pint bottle from 80p to 50p, the lowest since
2001.

The reduction is part of a wider campaign that lasts until the end of Sunday.

Although the move is likely to be welcomed by consumers faced with rising bills, angry farmers said the battle could force them out of business.

The price cut comes after the steepest inflation rate in 16 years, blamed largely on spiralling food costs.

An Asda employee replenishes milk shelves. The firm is set to offer two pints of milk for just 50p

This week Tesco introduced a two-litre bottle of milk for £1.06, while Asda and Sainsbury's dropped their price to 99p.

Budget chain Aldi is also reviewing its price.

Tesco said it was also lowering prices on a third of products, with organic produce prices to be cut by a quarter.

National Farmers' Union dairy board chairman Gwyn Jones said: "We are playing with people's livelihoods.

If (retailers) are going to pay for these promotions out of their own money, all well and good.

But we know from experience they will come looking for farmers to help redress the balance.

Our costs are going up and confidence is fragile. The price-cutting could force more farmers to go under."

Asda said suppliers would not be affected. Trading director Darren Blackhurst said: "We're investing in price cuts where they count, on everyday essentials."

Tesco commercial director Richard Brasher said: "Rising costs are hitting customers hard and they are looking to us to help."

Soaring food prices have pushed the official inflation rate up from 3.8 per cent to 4.4 per cent in July - a 16-year high.

Increases in the price of meat products, milk, cheese and eggs have contributed to a steep climb in the cost of living.

The average grocery bill for a typical family has climbed by more than a quarter to £127 since last summer, according to price comparison website Mysupermarket.co.uk.

The fierce price wars among retailers follows the rising popularity of discount stores like Aldi and Lidl.