Headlines are once again blaming reduced yields and a long overdue return to healthier UK grain prices for a 4p rise in the price of bread.

The facts should be considered before passing the buck straight back to farmers. One tonne of wheat can produce just over 1,500 standard 800g loaves of bread, and the wheat in a loaf costs about 7p at current prices. Even given the extreme limits of the past year's milling wheat prices, this accounted for less than a 1p increase in the cost of a loaf between August 2005 and July 2006.

The real reason for food price rises has more to do with increased fuel and energy costs. Our retail grocery market is fiercely competitive, with the multiples all seeking to reduce food prices to gain a competitive edge.

In the face of cost rises in milling, baking and distribution, energy is by far the main culprit for the rise in the cost of bread. Agriculture has long felt the pinch of rising energy costs. Now, with retailers feeling the same, such low food prices cannot be sustained by the rest of the supply chain either.

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