Milk and more dairy product UK prices set to rise in 2024 as Arla warns of global market and supply issues

• One of the UK’s leading milk producers has warned that dairy prices will likely increase later this year
• That’s because of global market uncertainty and reduced milk availability
• Current market volatility is expected to continue into the second half of 2024, despite strong consumer spending so far
• Slowing inflation and rising wages are expected to boost demand for dairy products
• But how will consumers will react to potential higher retail prices?

One of the UK’s leading milk producers has warned that UK shoppers can expect milk and other dairy product prices to increase later this year.

Dairy giant Arla - the producer of Cravendale - said the predicted price rise could be attributed to "uncertainty" in the global market, leading to a decrease in milk availability worldwide.

A cooperative that supports thousands of UK farmers, Arla anticipates that the current market volatility will persist into the second half of its financial year.

But despite consumer budget pressures in 2024, the company said that spending has so far remained strong.

The company said that people's purchasing power, which improved in the first half of 2024, should keep getting better in the second half, especially in Europe, as inflation slows and wages rise.

As a result, the company expects that demand for dairy products will increase, though it is unsure how customers will respond to the higher prices that may come from the increased costs of producing these goods.

Bas Padberg, managing director of Arla Foods UK, said: “Whilst we expect consumer confidence to remain into the second half of the year, trading conditions will be more challenging than we have seen in recent months as commodity markets rise again and we balance reduced global supply with the increasing demand for dairy.”

The warning came as Arla hailed “robust” trading over the first half of 2024, boosted by its brands, including Lurpak and Arla Protein. Lurpak sales were particularly strong over the past half-year, it said.

The food and drink firm reported an 11% increase in the total amount of products sold across its brands. But while sales increased by 5.4%, growth was slightly reduced as dairy prices slowed down.

Padberg added: “Following the high levels of inflation that we saw back in 2023, Arla has continuously reinvested back into our brands, to deliver value for our shoppers and ensure the necessary growth needed to return the highest possible milk price to our farmer owners.

“This combined with increased consumer buying power in the first half of the year has led to a strong performance across our branded range.”

What do you think about the potential rise in dairy prices? How might it impact your shopping habits? Share your thoughts and join the conversation in the comments section.