Britain’s dairy industry has suffered a devastating crash in wholesale prices in recent months - but the crisis has yet to make much difference to the majority of prices in store.

Turmoil in the global dairy markets - made worse by the Russian import ban - has contributed to wholesale price drops such as European skimmed milk powder falling 39% year on year in the 12 months to the end of September [Mintec]. Meanwhile, dairy farmer protests are targeting processors and retailers over a spate of cuts to the price they are paid for their milk.

Yet a snapshot of the retail price of lines sold in the big four mults on 4 November 2014, compared with the same products 12 months ago, shows many have actually increased.

In the case of Cheddar - where wholesale prices were down 18.6% year on year and 6.3% month on month [Mintec] - the average retail price of a kilo of cheese has risen 1.8% over the 12 months, to £8.99.

Retail price hikes have been even steeper in own-label Cheddar, up 3% to £7.45, while promotional activity has kept a lid on the price of the major brands. Across three of Britain’s largest Cheddar brands - Cathedral City, Seriously Strong and Pilgrims Choice - the average price has risen 0.3% year on year to £10.81.

Industry insiders say this suggests retailers have been guarding their margins on Cheddar despite the price war raging in the aisles - though they expect retail prices to come down should wholesale prices continue to fall.

Even steeper retail price increases have been seen on territorial cheese - again driven by increases in own-label lines. Across the category, prices have risen 4.5% to £8.54 a kilo, with branded products up 4.1% to £8.62. Fans of blue cheese have been hardest hit and are ­paying on average 6.1% more than a year ago, at £11.87 a kilo.

There is better news for bargain-hunting shoppers in the Continental cheese category - if they stick to own-label lines. On average, own-label Continental cheese has fallen 1.6% to £10.93, while branded lines have risen 2.7% to £9.78. Processed cheese, meanwhile, has risen 3.2%.

butter is one area where there are signs the 32.6% slump in UK wholesale prices is filtering through to retail - particularly when it comes to own label. Year on year, the average price of a kilo of the big four retailers’ own-label butter has fallen 12% to £4.28. In contrast, branded butters lines have risen 1.3% on average to £5.61.

And, although retailers have used four-pint bottles of milk as a key weapon in the price war - with recent research for AHDB and DairyCo showing the pack price had dropped 15p on average in nine months - across the milk category average prices have stayed fairly stable, with a litre of semi-skimmed milk costing shoppers 90p, down slightly on a year ago.

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