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Wheat prices threaten to add extra slice to grocery bills

Bread prices could rise on supermarket shelves in the run-up to Christmas after one of Britain’s biggest bakers said that it was in talks with retail chains to restore profits on baked goods.

Allied Bakeries suffered losses in the “low tens of millions” in its financial year to September 16 because higher wheat prices could not be passed on to its customers, George Weston, chief executive of Associated British Foods, its parent company, said.

The cost of wheat rose over the year from £115 a tonne to about £140 amid a fall in sterling against the dollar, because wheat is priced in dollars on the world market.

“We need price recovery from the retailers and we are in discussions with them,” Mr Weston said. If Allied Bakeries, which broke even the prevous year and showed a small profit the year before, does secure higher prices from the supermarkets, that cost could be passed on to the customer.

Industry experts say that at present almost all the profits on bread go to the retailers. They have been gradually increasing bread prices in a competitive market, by up to 6 per cent over the past six months or so, and they may absorb some of the extra costs rather than putting up prices.

Source: - 7 November 2017