Commodities

Supermarkets push bakers to reverse Sh5 bread price rise

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A supermarket attendant arranging loaves of bread on a shelf in October 2020. PHOTO | EVANS HABIL | NMG

Supermarkets kept the cost of in-house baked bread at Sh50, forcing bakers to reverse the recent Sh5 increase in the price of their loaves.

Bakers had adjusted their price two weeks ago to sell at Sh55 for a 400 gramme loaf, while supermarkets maintained the cost of in-house baked bread at Sh50, with budget-sensitive consumers opting for the cheaper option.

Most supermarkets in Nairobi bake their own bread, which they sell alongside the loaves from other bakers.

Processors attributed the increase—the first in four years— to high cost of wheat flour and other ingredients such as cooking oil.

“The market has forced bakers to reduce the price as customers opted for cheaper bread as an alternative,” said Bimal Shah, managing director of Broadway Group of Companies.

Mr James Ng’ang’a, a shopkeeper in Nairobi’s Shauri Moyo Estate, said he stopped stocking some of the price adjusted brands after customers refused to fork out more for bread, leaving him with huge unsold stocks.

“Customers would settle for less known brands leaving the ones that they are used to because of the Sh5 increase,” he said.

“I was subjected to losses after being forced to sell at the wholesale price before the expiry date to salvage my costs. As such, I have stopped stocking these bread brands.”

The decision to reverse the prices has placed millers at a crossroads as they have to weigh options on their margins and turnover of their stocks in the wake of rising cost of wheat at the international market.

A tonne of wheat has increased by 30 percent to Sh33,000 from Sh25,300 sparking a rally both on bakers and standard flour. The price is expected to rise further after Russia, which supplies the bulk of wheat to Kenya introduced a new tax on exports.

Wheat millers want the government to abolish the 10 percent duty on wheat and return it to zero-rated VAT status in order to cushion consumers against the rising cost of international prices.