The cost of milk is set to rise by up to 15 cents (US$0.08) a litre next month, according to industry sources, heralding an end to months of heavy discounts for consumers.

The Herald Sun newspaper revealed that the price increases are down to the higher payments being demanded by dairy companies, who have been losing money since industry deregulation last summer. Wholesale costs have been rising and Dairy Farmers is pushing to up the price of its Farmers' Best, Lite White, Shape and Dairy Farmers milk brands by between 10 cents and 15 cents a litre.

The Safeway supermarket chain has agreed to pay suppliers more for its milk, and consumers will notice an increase of five or six cents a litre from 1 September. Coles Myer is expected to implement similar rises.

Australian consumers have seen prices rise across sectors recently, with the cost of a loaf of bread increasing by around 15 cents. Egg prices are now expected to increase by 50 cents a dozen.