Food and agriculture group Carr’s said last week that resistance in the UK market to a flour price increase will hit group profits this half year.

The company said that, since January 2007, the UK market has resisted a flour price increase based on a massive increase in wheat prices, combined with higher energy costs.

"With little change envisaged in the foreseeable future, we expect a significant deterioration in our flour margins," said the firm. "We continue to action cost reductions, where possible without jeopardising the high quality of our flours."

It said it expected its results for the 26 weeks to 3 March, 2007, to show a reduction in group profit before tax compared to last year as food and certain parts of its agriculture division were experiencing market-related difficult times.

A reduction in group profit before tax for the year to 1 September, 2007, was also expected, it said.