Higher flour price could see bread price rise

Bread prices are rising as flour prices hike. Photo: Shutterstock
Bread prices are rising as flour prices hike. Photo: Shutterstock

Bread will rise by up to 20 cents per loaf to account for higher flour prices resulting from drought.

Tasmanian Flour Mills general manager Darren Lee said his business had to increase flour prices when wheat rose due to drought conditions.

There are different grades of wheat for different products, from flour to stock feed, with price rises set at between 23 and 30 per cent, Mr Lee said.

Flour prices went up on December 1 and will stay up “until the next harvest”, he said.

“Bakeries were warned a month or two ago that it was going to happen. For a loaf of bread this means an extra 15 to 20 cents per loaf that a baker will have to pass on to customers.”

For a loaf of bread this means an extra 15 to 20 cents per loaf...

Darren Lee

In Queensland and NSW wheat prices have risen by up by 46 per cent, Mr Lee said.

Western Australia and Tasmania have not been impacted as strongly, but wheat prices, and in turn flour prices, have risen nationally.

Australia’s strong export market had added to this situation, with contracted commitments drawing stock away.

“It’s because wheat is a commodity. Australia has been exporting between 840,000 and 860,000 tonnes of wheat for the last few months, so those contracts are filled first and the local market has to compete against it,” Mr Lee said.

“Wheat is a commodity so it works on supply and demand.”

The Bureau of Meteorology has predicted El Niño conditions to stay throughout the summer months.

“International climate models predict sea surface temperatures to remain at or above El Niño levels in December and January,” the bureau said.

“However, El Niño typically has a weaker influence on rainfall in South-Eastern Australia during summer than it does in winter and spring.”

If the predicted El Niño conditions continue beyond summer, the country’s drought conditions could be extended, “which would extend the higher wheat prices too”, Mr Lee said.

“The flour price should come back if there’s no drought next year.”