Tesco revealed this morning that annual pre-tax profits had halved to £1billion.
This came despite Britain's largest supermarket chain reporting revenues up 7.2% at £65.7billion.
CEO Ken Murphy said: "It’s been an incredibly-tough year for many of our customers, and we have been determined to do everything we can to help.
"Our results reflect our continued investment in delivering great value and quality for our customers, whilst at the same time looking after our colleagues.
"This is despite unprecedented levels of inflation in the prices we have paid our suppliers for their products, and the cost of running our own operations."
Tesco said yesterday it had cut the price of its milk for the first time since May 2020, in a sign that price rises for a weekly shop could be starting to ease.
Four-pint container
The group is reducing the cost of its four-pint container from £1.65 to £1.55. Two pints will be cut by 5p to £1.25 and a single pint will also drop by 5p to 90p.
Tesco said its costs for buying in milk had fallen, so it had decided to "pass that reduction on to customers".
The price of a weekly shop for households has been rising in recent months and latest official figures show that food inflation in particular was up by 18.2% in the year to February - the highest since 1978.
Milk itself has risen by 43% in price on average from February 2022 to February this year. It is one of many staples, including cheese and eggs, which have surged in cost and squeezed household budgets.
Jason Tarry, Tesco's UK and Ireland boss, said the supermarket's cuts to milk prices would "not affect" the price it pays to its farmers.
Cost-price deflation
"We've seen some cost-price deflation for milk across the market in recent times, and we want to take this opportunity to pass that reduction on to customers," he said.
Laith Khalaf, head of investment analysis at AJ Bell, told the BBC that, while the cut in price was only to a single product, the decision by Tesco was "some light at the end of the inflationary tunnel for consumers".
"It also suggests that the UK's fiercely-competitive supermarket sector isn't simply going to cash in on profits as wholesale costs fall, because there's always a competitor waiting in the wings to do some undercutting," he added.
Bigger supermarkets such as Tesco, Asda and Sainsbury's are having to constantly monitor their prices amid stiff competition from discounters Aldi and Lidl.
Mr Khalaf said that some "good financial news is long overdue" following a year of price rises and interest-rate hikes which had hit household finances.
Locking in
As well as reducing milk prices, Tesco said it was "locking in" prices on more than 1,000 everyday products until July 5, including Yorkshire Tea, chips, and Shredded Wheat.
Meanwhile, Sainsbury's announced on Monday that it was introducing lower prices on hundreds of products for members of its loyalty Nectar card.
The loyalty programme rivals Tesco's Clubcard which rewards members with deals when they shop.
FTSE 100
The UK's top share index, the FTSE 100, was down nine points at 7,815 shortly after opening this morning, following yesterday's 39-point gain.
Brent crude futures were 0.35% lower at $87.10 a barrel.
Companies reporting today
- Trading update: Imperial Brands, PZ Cussons