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Greggs warns of increase in prices

Greggs, the baker with exposure to many areas of the country, has today warned that an increase in wheat prices will ultimately feed through to the bottom line. The company expects bread and similar products to increase in price in the short to medium term although the company believes that the short-term wheat price is inflated. The price of wheat has increased by over 30% during the last seven days due in the main to issues with the Russian and Pakistan wheat crop. This has pushed the price of wheat to a two-year high on the commodity markets as investors and market participants search for secure supply lines.

Any increase in the price of bread, which many believe could be as much as 15pm a loaf, will ultimately feed through to the cost of living in the UK and the inflation figure. Inflation is currently over 3%, which is well above the Bank of England's target rate of 2%, with the potential to move higher in the short to medium term. How this will impact upon monthly budgets in the UK remains to be seen but this could not have come at a worse time for the UK public. Even UK base rates, currently at 0.5%, are having little impact upon consumer and business sentiment.

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