Supermarkets have raised the price of fresh milk in a move welcomed by producers and processors alike.

Asda raised a four-pint bottle to £1.34 - up 19p and a large rise compared with its ongoing two-for-£2 promotion. Tesco followed suit, also promising its dairy farms a 5.5ppl pay rise to 27.5ppl at the farm gate from October. Sainsbury's pledged an extra 1.5ppl increase to compensate its dairy farmers.

"We had to increase prices in dairy due to rising milk production costs," said an Asda spokesman. "We'll try to balance the rises by lowering prices on other products."

The NFU called the move a long overdue correction, while Dairy UK said it would relieve some of the pressure exerted by soaring farmgate milk prices on processors' margins. "It's important for retail prices to move forward," said director general Jim Begg. "It raises the absolute amount of money coming into the chain."