Bread price set to rise past £1 a loaf

Wholesale flour costs have risen for the second time in just four months in the wake of poor wheat harvests abroad , meaning that Britons already facing hefty increases in their mortgage payments, gas and electricity are now to be hit with an additional price rise for their daily bread.

Trade magazine The Grocer said a decision by milling giant ADM to increase the price of all its flour by 21.25 per tonne from next Monday comes after a 20 per cent price hike in September, which the company blamed on energy prices and poor harvests abroad.

The Grocer says that the latest rise - equivalent to an increase of 15 per cent - has sparked fears that other millers will soon follow suit, with cost implications for supermarkets and shoppers.

Since ADM's autumn price-rise, the cost of one leading brand of medium-sliced wholemeal bread has risen 22 per cent to 94p for an 800g loaf, according to The Grocer's weekly supermarket shopping basket price index.

Even if the price increase passed on to the country's shoppers was limited to 10 per cent, it would send the cost of a loaf on supermarket shelves soaring through the 1 barrier.

Gordon Polson, director of the Federation of Bakers, said:

"Retailers may say they don't want another price increase at this time but we have come to the point now when these costs have to be passed on, which is going to result in increased prices. It wouldn't come as a great surprise if other milling companies put up the price of flour."

ADM's rival Rank Hovis warned that wheat prices remained high and a spokesman added: "Further flour price increases are almost inevitable." A third miller, Carr's, is also believed to be considering raising the price of its flour.

ADM managing director Ian Pinner said: "Since August, British bread-wheat prices have gone up by a further 15 per cent. We have been absorbing these costs but cannot continue to do this."

Poor harvests in Australia, Ukraine, Argentina and North America are blamed on the dramatic increase in the cost of wheat - prices have surged to a ten-year high, as world wheat stockpiles have fallen to their lowest levels in 25 years.

"Bread bakers are experiencing increases of up to 25 per cent in the cost of flour," said Paul Kelly, of Food and Drink Industry Ireland on behalf of the Irish Bread Bakers Association.

"This is on top of increases of over 30 per cent in the cost of gas, the main energy source in baking bread. It is a global problem and it shows no immediate signs of improvement. If anything, it is worsening."