average price of a loaf of bread

Milk has been in the spotlight after Asda cut the price of four-pinters to 89p - but dairy isn’t alone in wondering ‘how low will it go?’

Bakers may well be asking that question after Tesco last week dropped the price of key 750g and 800g Hovis loaves to 78p. This is the lowest price point a big-four supermarket has sold a branded large loaf since spring 2011, when certain Hovis loaves were 75p.

Prices have been on a downward trend for more than two years as bread is used by the retailers as a key weapon in the fight for market share. Some 800g Kingsmill loaves, for example, have been 79p at Asda since the summer.

And even lower prices will be the last thing bakers want. As consumers leave the wrapped bread market, combined unit sales across the three major brands and own label have fallen 4.5% year on year, but price deflation has pushed value down 9.6% [IRI 52 w/e 6 December 2014].

Looking at larger loaves (750g or more) that have been stocked by the major retailers over the past two years, the average price has dropped 6.8% from January 2013 to this month.

Prices have rallied slightly in recent months, having fallen to a low of £1.07 a loaf in November 2014. While the highest-profile pricing activity is usually on branded lines, November’s slump was driven by own-label deals such as Tesco and Sainsbury’s reducing some loaves from £1.30 to £1.

This went against the pervading trend in premium own-label bread; while average prices have fluctuated a little in the past two years, they have been more stable than much of the bread category. In contrast, the price of a standard own-label loaf has dropped 10% from January 2013 to this month. Prices have even fallen at the lowest end of the market, with budget own-label loaves 43p on average, down 12% from 50p two years ago.

A slight recovery in bread prices this month has been driven by activity on brands, and in particular by promotions in Sainsbury’s and Morrisons coming to an end. This has resulted in the average price per loaf across the big four mults rising from £1.16 in November and December to £1.18 this month.