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Britons to pay more for a loaf of bread as wheat prices jump

Britons face paying more for a loaf of bread after wheat prices leapt due to a scorching July in Russia and calamitous flooding in Pakistan.

By James Hall, Retail Editor

Published: 7:12PM BST 02 Aug 2010

The price of wheat has rocketed, thanks in part to the hot weather in Russia and floods in Pakistan.

Wheat futures jumped to a 22-month high on Monday, hitting $7.11 (£4.47) a bushel on the Chicago Board of Trade. At 1pm New York-time wheat was trading at $6.92.

A severe drought destroyed one-fifth of the wheat crop in Russia, one of the world's largest exporters, and now wildfires are sweeping in to finish off some of the fields that remained after the hottest July for 130 years.

Heavy rains in Pakistan are said to have destroyed 15pc of the country's wheat crop.

"Inflation expectations are high," said Evgeny Gavrilenkov and Anton Stroutchenevski, economists at Troika Dialog in Moscow.

The Russian Grain Union said on Monday that it expects exports to decline to 15m tons, down from 21.4m tons in 2009. Although grain prices are rising on world markets, with further gains on Monday, they are growing even faster in Russia, so many farmers have littel incentive to export and are holding on to their harvested grain in the hopes of still higher profits.

"Russia has become the price-maker on the market," said Dmitry Rylko, director general of the Institute for Agricultural Market Studies.

George Lee, agriculture fund manager at Eclectica Asset Management in London, said the United States and other exporters, principally Argentina and Australia, are set to be "big gainers", while the European Union was not looking at its best harvests.

An average loaf of sliced bread currently costs between £1.30 and £1.40 in the UK.

£2 loaf anybody? I usually buy 2 for 1 offers and freeze them as £1.40 just seems a lot.

Looks like CPI will be flying, time for a wafer thin rate rise now, surely.


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Guest sillybear2

You must be of those doomsayers from that breadpricecrash.co.uk website.

... trying to steal the bread from the hard working families.

Hyper-inflation is already baked in.

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