Why is the cost of UK bread rising?
Wheat prices have increased 26.7% over the past year – reaching a nine-year high – thanks to a higher global demand for the staple and inclement weather.
Population growth in Africa and the rising middle class in China and India have ramped up demand for wheat, while its use in animal feed has also grown, particularly in Australia, where an ongoing drought has increased the need to substitute grazing for cattle.
Adverse weather conditions in South America, the US, Canada and Russia, too, is hampering yields, according to the Agriculture and Horticulture Development Board (AHDB).
The UN’s Food and Agriculture Organisation (FAO) reported that, while global food trade has shown “remarkable resilience to disruptions throughout the COVID-19 pandemic”, rapidly rising prices of commodities and energy pose significant challenges.
“World output prospects for major cereals [including wheat] remain robust, with record harvests expected in 2021, although cereals utilisation for human consumption and animal feed is forecast to grow faster.
“Higher prices of these inputs will inevitably translate into higher production costs, and eventually into higher food prices,” it said.
In October, the FAO reported world wheat “continued to surge for a fourth consecutive month, rising by a further 5% in October, to stand 38.3% higher year-on-year, and reaching its highest level since November 2012.”
Alice Jones, an analyst with AHDB, said, “Global wheat prices keep climbing each week on the back of supply concerns, and UK prices are following global trends.
"As long as global prices keep rising, there is scope for domestic prices to keep rising."
The perfect storm
Topping this in the UK, the rising wheat price have been exacerbated by recruitment challenges following its divorce from the European Union (Brexit) on 1 January 2021, along with rising fuel costs.
Kingsmill maker Allied Bakeries said the UK industry is “exposed to inflationary pressure in relation to the cost of flour, as well as the gas we use in our ovens and fuel for our delivery fleet.”
Gordon Polson, CEO of Britain’s Federation of Bakers, told The Grocer, “Energy pricing is also on the rise, while HGV driver shortages and recruitment are resulting in increased wage rates” causing food prices to rise.
Shoppers have been cautioned to expect the rise in price of other foods and amenities, too.
