Dairy Crest will increase the price it pays to its direct suppliers of liquid milk and cheese next month because of “considerable upward pressure” on raw milk prices.

The price of liquid milk would increase to 25p a litre and cheese to 24.7p a litre from October, Dairy Crest said in a trading update.

“Unprecedented changes have taken place in the dairy industry since the beginning of the year,” said CEO Mark Allen.

“The world markets for skimmed milk powder and bulk butter have been particularly strong. This, together with lower milk production levels has led to considerable upward pressure on raw milk prices.”

Price increases for fresh milk, potted cream and packet butter had also been agreed with its customers to reflect higher input costs, he added.

The group was trading in line with expectations, with good progress in its foods and dairies business, Allen said, but warned that a recall of its Clover brand in May this year would "materially impact" its spreads division.