Allied Bakeries’ parent Associated British Foods (ABF) said this week that it was negotiating with customers to increase the price of a loaf.

In a trading update, ABF blamed "recent sharp increases in the cost of flour" for a decision to seek a price increase. A spokeswoman confirmed that Allied was negotiating with customers on price rises and that it was a case of "not if, but when". The company refused to reveal the amount sought.

In its trading update, prior to announcing its full-year results to 15 September 2007 on 6 November, ABF said that its grocery profits would be down this year, partly due to losses at Allied Bakeries.

However, a relaunch of the Kingsmill brand in February had increased volumes and market share. Along with a previous increase, this had resulted in an improving performance for Allied Bakeries.

Meanwhile, profit in ABF’s sugar businesses was ahead of last year, driven partly by a substantial increase in profit from China due to a record crop and firm prices.

European sugar profit has been affected by moves to reform the EU sugar regime. Agreement to the final form of the regulations is expected from the Council of Ministers by the end of September.