Bakeries Demand Price Hike for Regulated Bread Amid Rising Flour Costs

By ליאת רון

Translated & summarized from Walla by baba

CenterNeutral tone

Hebrew · 3 newsrooms covering

Israeli bakeries are seeking government approval to raise prices on regulated bread due to a 10-15% increase in flour costs, driven by the Russia-Ukraine war's impact on wheat supply. The price hikes are expected to affect all baked goods and supermarket flour. Bakeries cannot absorb the rising costs from alternative, more expensive suppliers and are facing increased transportation and global shortages. The Ministry of Economy must approve any price changes for regulated bread, leaving bakeries to absorb costs temporarily.

The story in 6 lines · by baba

Bakeries will ask the Economy Ministry to raise regulated bread prices due to rising flour costs.
Flour prices are increasing by 10% to 15% starting in November and December.
The Russia-Ukraine war has disrupted wheat supplies, forcing Israel to use more expensive alternatives.
Imported wheat costs have risen 35% to 40%, alongside higher shipping and global shortages.
Price increases are expected for all baked goods, including those not under government regulation.
Consumers may also see higher prices for flour sold in supermarkets.

Bakeries Demand Price Hike for Regulated Bread Amid Rising Flour Costs — Editorial illustration generated by baba News, not a photograph of the event.

Bakeries producing government-regulated bread are planning to request a price increase from the Ministry of Economy due to a surge in flour costs set to take effect in early November. This price hike is expected to extend to non-regulated breads, cakes, cookies, and other baked goods sold in bakeries and supermarkets.

Flour mills in Israel have informed their clients of price increases ranging from 10% to 15%, depending on the flour type and contract. Some new prices will be implemented on November 1, with others following in December. Bar-Rav Mill, a major supplier, has already announced an 11% increase starting next month.

The primary driver for these price increases is the escalation of the Russia-Ukraine war, which has disrupted wheat supplies to Israel. Russia was a key wheat supplier, but Ukrainian attacks on Black Sea ports and vessels have led suppliers to cancel orders, including shipments destined for Israel. Consequently, Israeli mills are forced to seek alternative suppliers in Poland and Western Europe, incurring significantly higher costs. Imported wheat from these new sources is reportedly 35% to 40% more expensive than before, compounded by increased sea freight costs, global wheat shortages due to weather events, and kosher certification limitations.

Domestic wheat is also contributing to higher production costs. After minimal use last year due to drought, mills are now purchasing Israeli wheat, but its price is pegged to the more expensive U.S. wheat. Industry sources indicate that bakeries will be unable to absorb the full cost increase and will likely pass it on to consumers. The exact extent of the price increase remains unclear, as flour is only one component of production costs, alongside labor, electricity, packaging, and transportation.

The situation is more complex for regulated bread, as its price is fixed by the government. Bakeries must obtain approval from the Ministry of Economy for any price adjustments, meaning they will have to absorb the new costs without immediately passing them on. This development signals another basic commodity, present in nearly every Israeli household, potentially joining the wave of price increases. Even consumers buying flour for home baking may face higher prices, as the cost increase is expected to affect flour sold in supermarkets as well.