Northern Foods chief executive Jo Stewart has warned further price increases are on the cards for bread and other flour related products to cover sharp rises in flour prices. He said: "In round terms, bread is about 10% of our business. When you add things like pastries for savoury products and biscuits, flour affects a significant part of our business. "On morning goods and rolls, you could be looking at a 5% price increase. On biscuits, perhaps 1%-2%." The company has already implemented prices rises of 1% in the first quarter and 1.5% in the second to cover the rising cost of other raw materials. Although cutting short promotions ahead of the price increases had hit volumes in the first quarter, a return to more normal levels of promotional activity in the second quarter has prompted a significant improvement in sales, said Stewart. He said the company was well positioned for the crucial trading period from autumn to Christmas. "We're launching a major new range of stonebake ciabatta style pizzas under the Goodfellas brand in October. "Sales to our five largest retail customers were up 10% in the last 11 weeks." Major efficiency gains have been achieved through transferring production at the R&K Wise cake factories in Swindon and the Rawmarsh desserts factory to sites at Oldham, Bolton and Minsterley respectively. He confirmed statements made in July that first-half profits were expected to be lower than last year, owing to disruption caused by the restructuring and initially low margins on new products. The profitable Lift lemon tea brand, acquired as part of the Paynes business, has been sold to Hicks, Muse, Tate & Furst so the company can focus on its core convenience foods categories. Stewart said Northern Foods was well placed to weather an economic downturn and would pick up trade from catering outlets as customers spurned restaurants and stayed at home. {{NEWS }}