Bread prices are set to rise by up to 4 cent a loaf next week after one of the country's biggest flour millers, Odlums, announced it was increasing the price of flour.
The price increase will further fuel the current rise in the cost of living. Earlier this week, it emerged that inflation is running at 4.9 per cent, the highest level in four years.
Odlums' decision to increase flour prices by €35 a tonne, equivalent to 3-4 cent a loaf, takes effect from next month. It follows an earlier increase of 6 cent in flour prices last September. The company said it had no option but to pass on raw material cost increases it had suffered since last October. It blamed wheat price increases on drought conditions in the southern US states and Australia and harsh winter conditions in the Ukraine and Russia.
Global wheat stocks are at their lowest levels for almost 25 years, while demand for grain has increased, particularly in China and India. As a result, wheat prices are 40 per cent higher than they were a year ago.
Odlums said wheat prices would remain high with little prospect of any reduction in the immediate future. Demand for corn (maize) and wheat to produce bio-ethanol was increasing in the US and Europe, forcing up prices and attracting commodity funds into the market.
The Irish Farmers Association has said there was no justification for large bread price increases, with just 9 cent of the cost of a loaf of bread making its way to grain growers.