Greggs' prices rising 4.5% as costs bite

The company, the UK's number one bakery chain with 1,353 shops, said cost pressures arising from increases in the price of flour and dairy products have been mitigated to some extent by forward buying.

But group managing director Sir Michael Darrington told British Baker that this would not prevent prices to customers continuing to increase, with protein commodity rises also expected. Greggs' prices had risen 4.5% over the last year and were likely to rise that much, or even more in the next year.

"Our robust performance to date encourages us to believe that current and anticipated cost increases will be recoverable from the marketplace," he added.

Favourable weather in August and September coupled with a positive response to Greggs' latest TV advertising campaign have boosted sales, the company said in a trading update to 6 October.

The group saw like-for-like sales up 5.9% in the first 16 weeks of the second half of its financial year, compared with the same period of 2006, it said. Operating profit was above the comparable period in 2006, where it saw "disappointing" flat like-for-like sales.

A new Greggs' bakery in Cambuslang, outisde Glasgow, intended to boost growth in Scotland, completed last week.

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