Price shock looming over wheat costs 'within a year'
03 August 2010
Latest analysis from Verdict shows should the wheat price remain elevated for the next few months shelf prices for many products could go up by 6.7% within a year. Some items, such as croissants, could go up by as much as 11.1%.
The highest monthly increase in the price of wheat since 1973* ultimately means consumers will pay more at the till for their food shop, according to retail analysts Verdict Research.
According to Verdict’s figures, the last time wheat prices went up so much the average price of an 800g white sliced loaf rose from 10.1p at the start of 1973 to 18.9p in 1974, an increase of 87%.
Neil Saunders, consulting director, says: “With wheat prices so elevated suppliers and retailers will have to pass across costs to the consumer; and it’s not just in bread, many other grain based products will also rise such as beer. That said, we won’t see a return to 70s style inflation as the grocery sector is far more competitive now than it was back then.”
Verdict figures show that food inflation has been muted since the start of this year but an increase in commodity prices could lead to an inflationary spike over the next 12 months.
Here is Verdict’s latest analysis tabulated:
| Product | Aug
2010 | Aug
2011 | %
increase |
| Supermarket own brand sliced white loaf (800g) | 0.74 | 0.79 | 7.2 |
| Branded, sliced white loaf 800g) | 1.15 | 1.27 | 10.3 |
| Croissants, 4 pack | 1.04 | 1.16 | 11.1 |
| Scones, 6 pack | 0.76 | 0.84 | 10.8 |
| Penne pasta, 500g | 0.83 | 0.92 | 11.3 |
| Quiche lorraine, 400g | 1.88 | 2.00 | 6.4 |
| Cornish pasty, 227g | 0.83 | 0.88 | 6.6 |
| Chicken breasts, skinless price per kilo | 9.33 | 9.86 | 5.7 |
| Free range eggs, 6 medium | 1.44 | 1.50 | 4.4 |
| Milk chocolate biscuits, 400g | 1.08 | 1.13 | 4.2 |
|
|
|
|
| Total cost | 19.08 | 20.36 | 6.7 |
Source: Verdict research* Since June wheat prices have increased more than 50%, driven by predicted global shortages after floods destroyed gain crops in Pakistan and heatwaves and droughts have devastated production in Russia, Kazakhstan and Ukraine.
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