Flour prices rise
and increasing energy costs, according to experts.
One of the industry's biggest millers, ADM Milling, has already announced it is increasing prices to £28.75 (€42.66) per tonne for all flours from next month.
And another bakery giant, RHM, which makes around a third of UK bread, announced this week that it would follow suit.
With the costs passed on to consumers, eventually shoppers could have to pay between 4p (€0.06) and 10p (€0.14) more for a loaf.
Experts cited in the trade magazine, the Grocer, predicted that flour prices could rise by as much as 20 per cent across the industry.
Managing director of ADM, Ian Pinner said: "This is the third year that we have had to accept increased energy costs which are now 30% higher than in November 2005. In addition global wheat markets have moved up sharply in reaction to supply and demand figures showing world stocks to be the lowest for 25 years.
"Weather conditions have had an adverse effect on crops, Ukraine and Russia both experienced severe crop destruction due to extreme and extensive periods of adverse weather and the droughts in North America, combined with lower acreage of plantings, have reduced their wheat crop. These global market factors, coupled with lower stocks and a forecast reduction of supply in the world's key wheat producing areas, have pushed up UK wheat prices to a level 15% higher than in November 2005."
The recent summer heatwave caused crops to struggle across Europe and, in July,the Food and Agriculture Organisation (FAO) warned of a 1 per cent drop in output from last year's cereal figures.
In addition, they predicted that rising demand, coupled with the dip in production, could mean rising and volatile wheat prices.
And the International Grains Council (IGC) followed suit with a similarly gloomy forecast - lowering its 2006 to 2007 world wheat output to 596 tonnes, a 21 metric tonnes drop from last year.