Bread prices soar amid rising costs of wheat and oil
Bread makers have increased prices to cushion their earnings from rising cost of raw materials adding fresh impetus to the cost of living measure.
Bread makers have increased prices to cushion their earnings from rising cost of raw materials adding fresh impetus to the cost of living measure that has come under pressure from expensive energy and other food items.
Broadways Bakery Monday increased the prices of its products from Sh3 and Sh10 depending on sizes with the 400 grams retailing at Sh38, its second increment this year, citing rising wheat, cooking oil, packaging and transport costs.
Mini Bakeries Ltd, producers of Supa Loaf brand, and KenBlest who had earlier reviewed their prices to match the current Broadways rates reckon that they will also review the rates to reflect expensive inputs.
This is set to squeeze the budget of most households that have lost purchasing power due to rising energy, transport and food prices, which has pushed monthly inflation to 12.5 per cent in May from 5.42 per cent in January.
“Raw materials such as wheat, sugar, fat as well as packaging have risen sharply since our last increase in January,” said Mr Bimal Shah, the managing director for Broadways Bakery Ltd.
“The depreciation of the shilling in recent months has also made the rise necessary,” added Mr Shah.
Mr Shem Nyang’weto, the marketing officer of the firm, echoed the sentiments of other industry players saying the combined increased cost of inputs had put pressure on their production costs.
Cooking oil prices have doubled in the last one year to retail the current average of Sh410 per a two litre can, which is a 30 per cent rise from the beginning of the year on the back of rising prices of palm oil. Prices of locally manufactured cooking oil, which is processed from crude palm oil imported from Malaysia and Indonesia, increased by about 12 per cent in the last quarter of 2010.
On its part, prices of wheat have risen by over 50 per cent in the past one year, a climb that millers attribute to an increase in international prices owing to shortages caused by export bans by Russia and Ukraine — the top producing countries. Currently, the prices are averaging at between Sh3500 and Sh4500 in Nakuru and Eldoret per 90Kg bag.
Local farmers are also said to be hoarding their produce hoping for higher prices, causing artificial shortage that is adding pressure to retail prices.
The Kenyan currency has been on a weakening streak from a high of Sh83 to the dollar in March to Sh92 to the dollar on Monday, representing the lowest nominal level in the currency’s history. This has further increased the risk of imported inflation.
Inflation hit 12.95 per cent in Kenya last month and is expected to touch a new high at the end of this week after the Kenya National Bureau of Statistics releases new figures reflecting the impact of the weak shilling on prices of consumer goods.
“We expect inflation to average 13.6 per cent in 2011, with further increases probable before it peaks and starts to decline again,” Mr Razia Khan, a London-based economist with Standard Chartered said.
KNBS estimates that 87.9 per cent of Kenya’s inflation is driven by the surge in food, oil and housing prices that ride on each other to worsen the cost of living.
High inflation figures could also hurt demand as consumers spend more on basics and with bread being a price sensitive product, such increments, though small, may slow sales for bakeries as families opt to substitute bread for breakfast.
