Price of bread set to rise after UK heatwave

The price of a loaf is expected to have risen by as much as 4p by the time Britain's sizzling summer has taken its toll on this year's poor wheat harvests.

Disappointing low yields reported by farmers, many of whom have had to harvest their crops weeks earlier than usual, are helping to force up the price of flour.

This week two of Britain's leading millers said rising wheat prices and further increases in their energy bills left them no choice but to pass on the costs to bakers.

A steep rise in prices will further increase the pressure on inflation, which has already been hit by increases in energy and fuel bills.

Rank Hovis, which owns eight mills, is increasing its flour prices by an average £29 ($86) per ton next month.

And ADM Milling, which owns nine mills, is raising prices by £28.75 per ton.

The two companies are the biggest millers in the UK.

Experts said this would mean price increases of around 15 per cent to 20 per cent for major flour users.

The National Association of Master Bakers, which represents around 1,000 bakeries, expects bread to go up in price by 2 to 4p per loaf.

Its chief executive, Gill Brooks, said: "The small craft baker will be hit particularly hard. Little outlying villages and coastal areas where trade is seasonal will struggle a bit, but will have to do it."

A spokesman for Rank Hovis - which owns the Hovis brand and supplies own-brand bread to other stores - said its prices were being kept under review.

Gordon Polson, director of the Federation of Bakers, told the trade magazine The Grocer that bakers were also affected by rising fuel costs.

"If there are increases in flour costs it is inevitable that these costs will have to be recovered," he said.

Britain's bread-making industry is valued at £3bn and employs 20,000 people.

The larger companies produce 80 per cent of bread sold in the UK.

In-store bakeries within supermarkets produce about 17 per cent and high street retail bakers produce the rest.

ADM Milling said its price rises were an "essential reaction" to rising costs.

Managing director Ian Pinner said: "This is the third year we have had to accept increased energy costs, which are now 30 per cent higher than November 2005.

In addition, global wheat markets have moved up in reaction to supply and demand figures showing world stocks to be the lowest for 25 years.

"Bad weather caused crop destruction in the Ukraine, Russia and North America. UK wheat prices are 15 per cent higher than in November 2005 because of global factors, lower stocks and forecasts of further reduced supply," Mr Pinner said.

While wheat has wilted, Britain's berry crop, especially strawberries and raspberries, looks like having a record year.

Overall, the subdued food prices so far this year have kept a lid on inflation, but the summer temperatures could indirectly lead to an increase in the cost of living.

Earlier this month the Bank of England increased interest rates by a quarter of a percentage point to 4.7 per cent in an effort to keep inflation in check.

Inflation rose to 2.5 per cent in June - above the Government's 2 per cent target - amid fears energy costs may force prices up.

The UK recorded its strongest economic growth in two years between April and June, while the housing market has picked up.

But spiralling oil prices and rising energy costs have raised the spectre of growing inflationary pressures.

- INDEPENDENT