Aisling Pugh and her daughter Alannah Pugh (3) enjoy a glass of milk - soon to be cheaper as prices throughout the economy drop by more than 6%

Dairy giant Glanbia is set to drop prices on a range of products this week as the company seeks to shore up its position in an increasingly competitive milk market.

The company will announce major reductions on two-litre packs on its Avonmore, Premier, CMP and Snowcream milk brands, with consumers set to benefit from the savings tomorrow. The latest move follows a series of similar reductions throughout the year and should result in a minimum 10% or 20 cent fall in the price of a two-litre pack of milk.

"This price drop announcement is good news for consumers and will help protect the important position occupied by Glanbia brands in a highly competitive grocery market," said Colin Gordon, chief executive of Glanbia Consumer Foods.

The move will be welcomed by consumers who are already benefiting from significant deflation. Avonmore is the number one milk brand in the Irish market and is number two top selling grocery brand in the country while Premier is the number two milk and cream brand in Ireland.

However, it is unlikely to impress retailers, who will see their margins cut as a result of the decrease and farmers who may fear that it will lead to another cut in prices paid for their milk.

The dairy market has come under considerable pressure in the recession, with Glanbia reporting a 28% fall in profits in the first half the year in August.

The company posted a pre-tax profit of €38m down from €53m the previous year on the back of falling revenues.