The competition regulator has launched a market study into baby formula prices, declaring that costs remain “historically high”.

The Competition and Markets Authority (CMA) had previously identified a 25% price increase over two years.

It also declared, last autumn, that the market was highly concentrated with just two companies, Nestle and Danone, accounting for 85% of sales.

The watchdog’s decision to begin a market study, which should conclude by September, gives it the power to force suppliers to provide information on pricing and other issues.

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The CMA has previously relied on voluntary submissions.

Last year, Sky News revealed the desperate measures families were taking to feed their babies because of high prices at the shops during the wider cost of living crisis.

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Producers of baby formula have all blamed higher factory costs, including ingredients and energy.

A string of supermarkets cut the cost of Aptamil a month ago after Danone, which also makes the Cow & Gate brand, agreed to reduce the price at which it offers the powdered formula to retailers by up to 7%.

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CMA chief executive Sarah Cardell said of its market study decision: “Infant formula is a key part of the weekly shop for many parents across the UK who rely on these products to ensure their baby gets all the essential nutrients they need.

“Whilst it’s a positive sign that prices of some products have fallen since our update last November, the cost of infant milk remains at historically high levels.

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“We’re concerned that parents don’t always have the right information to make informed choices and that suppliers may not have strong incentives to offer infant formula at competitive prices.

“We are determined to ensure this market is working well for the many new parents who depend on infant formula and it’s essential that any changes we propose are based on evidence and a strong understanding of the market.

“That’s why we’ve now decided to take forward our work on infant formula as a market study, using our formal legal powers.”

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