Four supermarkets have slashed the price of milk this week, with the competition leading to hopes record food prices could finally start to fall.

The overall cost of food rose 15 per cent in March compared to February, according to experts at the British Retail Consortium, with fresh food prices up 17 per cent – a new record.

Alternative figures show grocery prices have risen 17.5 per cent in the year to March 2023, according to analysts at Kantar.

It means shoppers are facing an £837 increase in their average annual food bill.

But experts say there may be ‘light at the end of the tunnel’ as four supermarkets all bucked the trend by slashing prices on milk this week.

Tesco led the charge on Wednesday, reducing the price of a four-pint carton of milk from £1.65 to £1.55, two pints from £1.30 to £1.25 and a pint from 95p to 90p.

Sainsbury’s then followed, cutting milk prices to £1.25 for two pints and 90p for one pint, as did Aldi and Lidl.

Both Lidl and Aldi have matched Sainsbury’s and Tesco’s move in cutting two pints to £1.25 and a single pint to 90p.

Supermarkets have previously come under fire for how they raised prices for consumers.

During an interview with the BBC in February, the chairman of Tesco accused other companies of ‘using inflation as an excuse to hike prices further than necessary.’

But analysts said this week’s milk price cuts showed supermarket competition could show a willingness to drive down costs in other areas of grocery shopping too.

Laith Khalaf, head of investment analysis at stockbroker AJ Bell, said the price cut showed ‘some light at the end of the inflationary tunnel for consumers’.

He said: ‘It also suggests that the UK’s fiercely competitive supermarket sector isn’t simply going to cash in on profits as wholesale costs fall, because there’s always a competitor waiting in the wings to do some undercutting.’

Richard Hunter, head of markets at stockbroker Interactive Investor, said: ‘The supermarket price war has been underway for some considerable time, and in the current environment basement prices have become extremely important to the cost-pressured consumer.

‘The reduction in milk prices will be a welcome development, but with food inflation overall still around 17 per cent, upward pressure on prices is very much intact.’

Why are food prices so high?

Global food prices began rising after the pandemic as economies started to recover, and the impact, combined with the Ukraine invasion, has been severe.

Higher energy bills have also forced producers to hike their prices, which have filtered through to everyday items like milk, eggs and bread.

But there are longer-term structural issues at hand, too. The impact of higher labour costs long predates the Ukraine invasion and pandemic.

Brexit has been an aggravating factor as recruitment has dwindled in the more labour-intensive parts of food production, which often relied on workers from eastern Europe.