Bread prices must rise, says owner of Hovis
Thursday 05 August 2010
Premier Foods sent out a warning to shoppers over bread prices yesterday as the UK's biggest food producer battles against the soaring cost of wheat.
The group, which makes Hovis, said it would have to pass rising wheat inflation on to retailers later this year, leading to fears that the shelf price of a loaf of bread could rise by up to 10p. Wheat costs have rocketed by about 50 per cent since late June. Harsh droughts and wildfires in Russia – one of the world's largest exporters – are thought to have killed a fifth of its wheat crops, which is pushing global prices up.
The group, which also owns brands such as Mr Kipling and Branston Pickle, warned that second-half profits in its Hovis bread division would fall short of levels seen last year as a result.
Premier is sourcing all its Hovis wheat from British farmers this year and, while crops are expected to be bumper in the UK, prices will rise in line with the global market.
Premier also signalled price pain across the board later this year as it said it was seeing inflation year on year in dairy, cocoa and paper and plastic packaging.
But shares in Premier rose nearly 10 per cent to 19.74p as its interim results pleased investors. It posted underlying pre-tax profits of £33m in the six months to 26 June against £39m a year earlier. Underlying sales fell 4.5 per cent to £1.2bn.
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