Media reports mislead shoppers over bread price

20 June, 2011
Page 4 

Headline-grabbing government statistics showing bread inflation at nearly 6% do not reflect the real price of a loaf, which has barely risen in the past year despite a massive increase in wheat costs.

The Office for National Statistics reported that, year-on-year, bread and cereals inflation stood at 5.8% in May and 6.9% in April statistics that sparked newspaper stories on 'soaring bread prices'.

But the price of a white sliced loaf in London increased by just 1% in the year to March, according to the Economist Intelligence Unit's Cost of Living Survey, while Kantar Worldpanel said total bread prices had increased just 2% during the same period.

The discrepancy is due to ONS data covering products beyond bread, including cakes, biscuits, breakfast cereals and pasta. It also does not cover 'two for one' or 'two for £2' promotions, even though these have been a key supermarket sales tool in the past year.

According to analysts Assosia, the number of bread promotions in supermarkets increased by 40% from 2009/10 to 2010/11, with consumers on average achieving a 29% discount. Meanwhile Hovis' parent company Premier Foods said that across all grocery categories, 33% of products were bought on promotion during 2010.

"There's a disconnect between what the ONS figures say and what the punter is actually paying for a loaf," said Edward Garner, communications director at Kantar. "Promotions have been increasing over time, so there's a gap developing."

Gordon Polson, director of the Federation of Bakers, backed up the view. "Newspaper articles might single out a single product say a baguette that has gone up by 25% but my personal reading of the situation is that, overall, we haven't seen big price rises."

With bread prices flat and the cost of wheat increasing by over 70% in the past year, the bakery supply chain has found its margins coming under extreme pressure. Meanwhile, total value sales for bread across wrapped and ISB loaves fell by 1.7% in the 52 weeks to 15 May with volumes unchanged (Kantar Worldpanel). Genuine price increases seem likely if, as expected, this year's harvest is below average and the price of wheat remains high.





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