LONDON (MarketWatch) — British cereal lovers, rejoice — milk is now cheaper than water in the U.K., the cost pushed down by a fierce supermarket price war that has ended up putting the squeeze on farmers, too.

The price of semi-skimmed milk averages out at 43 pence (65 cents) per liter (just over two pints), compared with 44 pence for bottled still water, food-retail trade magazine The Grocer found in research published Monday.

There are caveats: The study focused on comparing multipacks, rather than smaller products, and on own-label milk, rather than more-expensive brands. Even so, it’s being seen as a sign just how far supermarket chains are prepared to go as they fight for the allegiance of the British shopper.

The big four supermarkets —Tesco TSCO, +2.04% , Sainsbury’s SBRY, +2.01% , Wal-Mart’s WMT, -1.02% Asda and Morrison’s MRW, +1.27% — kicked off a price war earlier this year, after seeing their market share eaten away by German discounters Aldi and Lidl. Milk — a staple of the family shopping cart — was chosen as a key battleground. Over last year, the cost of a four-pint carton of milk dropped from £1.39 to £1 at Sainsbury and Tesco, the Grocer noted, while Asda dropped its price to 89 pence this week.

For U.S. shoppers, it’s a different story. The average price of a half-gallon of milk was $2.50 in late December, up from $1.48 a year previously, according to the USDA.

Some doubt the U.K. tussle is a winnable war. In October, Moody’s warned the big four supermarkets face losing this “race to the bottom”, predicting their low-cost rivals, which operate on smaller profit margins, will only keep on wooing custom away. But last week, Tesco vowed to make even more price cuts, as it tries to turn around its fortunes after a turbulent year.

The real casualties in the retail battle look to be the British farmers, who are bearing the brunt of lower prices. First Milk, the U.K.’s largest dairy company, said Thursday it is putting back this Monday’s payments to members, and all payments after that, by two weeks. The company, which is owned by farmers, blamed “volatility” and a price slump for the move.

“2014 was a year of volatility that has never been seen before,” First Direct said in a statement posted online. “While returns from globally traded products were at record levels 12 months ago, they have fallen over 50% since then, leading to a steep fall in milk prices around the world.”