Manufacturers are still struggling to recoup this summer’s £20 a tonne hike in bread wheat prices.
And with wheat prices since up another £20 a tonne and flour prices set to rise further in response, more bread price rises in the new year could be unavoidable, according to British Bakeries and Allied Bakeries - the number one and two players in the bread market.
British Bakeries declined to comment on how this might affect the price of an 800g loaf of Hovis, already up 5p to 68-69p in most supermarkets to recoup the summer’s flour price hikes.
However, analysts said the retail price of a loaf would have to rise at least another 3p to cover soaring raw materials bills, while suppliers of biscuits, cakes and like products could be hit even harder.
Investec analyst David Lang said: “If the Chinese really start buying in wheat, then who knows how much further up prices could go.”
An Allied Bakeries spokesman said: “We may have to consider the impact [of rocketing wheat prices] on our bakery range early in 2004 and will work with our customers on ways that we can recover these costs.”
Flour supply problems have been worsened by EU cereal production falling from 210 million tonnes last year to 180mt this year, said supplier Rank Hovis. Home Grown Cereals Association forward bread wheat prices for January 2004 are £123/tonne at November 17 compared to £81 at the start of the year.