Parents warned they are paying over the odds for baby milk

Parents have been "paying over the odds" for baby milk because of a lack of competition in the formula market, a government watchdog has said.

It stopped short of recommending price controls, but said they remain a possibility, adding parents have been "shouldering the costs" of price increases in the market for years.

The Competition and Markets Authority's (CMA) interim report said the baby milk industry needed a shake-up to help parents struggling to afford it.

"We're concerned many parents opt for more expensive products, equating higher costs with better quality for their baby," CMA chief executive Sarah Cardell said.

Just two companies - Danone and Nestle - control the majority of the UK market.

A spokesperson for Danone said it "will engage with the CMA as it develops its final findings and recommendations". Nestle has previously recommended the investigation.

The market is currently regulated so that promotions, such as a loyalty points or discounts, are banned.

This is to encourage breastfeeding, but the CMA raised concerns about "unintended consequences, contributing to consumers paying higher prices".