KEY POINTS:
Consumers already reeling from sharp milk and butter price rises are in for another shock as the cost of bread, bacon and eggs follow suit.
Bread manufacturers are expected to increase the price of bread by up to 20 per cent before Christmas and will not rule out another price rise in the new year as they respond to soaring international wheat prices which have doubled in the last year.
"Consumers should expect a 10-30 per cent increase, something in that range, depending on the type of bread," a spokesman for Champion Flour said yesterday.
George Weston Foods chairman Laurie Powell said he agreed with that assessment.
This would mean a mid-priced loaf of bread selling for $2.60 at the supermarket would increase to $3.12.
Egg producers are also warning of price rises, with retailers at last Saturday's Otago Farmers Market attributing a 20 cents-a-dozen increase in the price of eggs because of rising grain prices.
Mainland Poultry financial controller Gary Dixon said the company was looking for alternative food sources, but it was now reviewing retail egg prices.
Soaring international demand and tightening supplies have forced up the price of grain and dairy products, which will flow through to higher prices for consumer products such as pastries, baking, pasta and sandwiches.
Earlier this month Fonterra Brands NZ raised the cost of butter by 23 per cent and last month milk rose 10 per cent.
Pig farmers are also warning soaring grain costs will force up pork and bacon prices, with grain-based feed making up 60-70 per cent of their production costs. New Zealand imports 70 per cent of its wheat from Canada and Australia, but a combination of growing demand and poor harvests in Australia, the United States and Europe and farmers growing crops for biofuel, has slashed supplies.
A year ago the international price of wheat was US$190 ($258) a tonne but this week hit US$370. The rising food prices are hitting those on fixed incomes, with one agency questioning why goods and services tax is imposed on staple foods.
Budget Advisory Service director Shirley Woodrow said the price rise, coming on top of the high cost of power, made life increasingly difficult for people on low incomes.
"People are doing everything right and not wasting their money but the costs are going up all the time," she said.
Age Concern Otago executive director Susan Davidson said other countries did not impose extra taxes on staple foods, yet New Zealand still charged goods and services tax with no exceptions, she said.
A single person on superannuation received just $14,407 a year while a couple received just over $22,000, which was "pretty tough".
Finance Minister Michael Cullen has rejected the relaxation of goods and services tax on essential foods.
Price Hikes Bread:
Predicted to go up 20 per cent before Christmas.
Eggs: Predicted to increase by 20c a dozen.
Milk: Up 10 per cent last month.
Butter: Up 23 per cent this month.
Pork and bacon: Expected rise soon.
- Otago Daily Times
