Dairy prices have reached a three-year high, and the cost of cheese is climbing steadily. Pre-packed Blue Stilton is now 41.2% more expensive than a year ago, and is at its highest price since March 2005. The basket is now 18.7% more expensive than at this time last year, 31% higher than two years ago and 13.5% more than it was three years ago. Last year's milk price increases are also leading to cheese price inflation. Further cheese price increases were likely, said British Cheese Board and Stilton Cheese Makers' Association secretary Nigel White. "What is happening now reflects what happened to milk prices going back 12 weeks, and if you are selling an 18-month-old Cheddar, you can see how there would be further increases in the pipeline," he said. "My guess is this will carry on for maybe another nine months, but all food prices are rising. Consumers are going to be faced with some difficult decisions as to what they buy, and there will be shifts between product categories." But White predicted Stilton sales at least would hold up: "On past experience there may be a small impact on demand for occasional purchases such as Stilton, but a 10% price increase may lead to just a 1% drop in sales. It is price-inelastic and it is not alone. There have also been severe price increases on imported cheeses." Stilton manufacturers faced quite strong competition for milk, he added, and they were paying among the highest prices for their milk of any operations in UK dairy. "Hopefully these price rises will mean dairy farmers get better returns, because if they are not getting a price adequate to stay in business then we are not going to have any milk to make Stilton."

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