Bakeries Seek Price Hike for Regulated Bread Amid Rising Flour Costs

Translated & summarized from Hamal by baba

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Hebrew · 3 newsrooms covering

Israeli bakeries are seeking government approval to increase the price of regulated bread due to a 10-15% rise in flour costs, driven by the Russia-Ukraine war's impact on wheat supply. This increase is expected to affect all bakery products and retail flour. The Ministry of Economy must approve any price hike for regulated bread, while other products will likely see price adjustments soon. The rising costs are attributed to disrupted supply chains, increased shipping, and domestic wheat prices.

The story in 6 lines · by baba

Bakeries will ask the Ministry of Economy 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 mills to use more expensive alternatives.
Alternative wheat sources are 35% to 40% more expensive than previous supplies.
Increased shipping costs, weather, and kosher restrictions also contribute to higher prices.
Consumers may face higher prices for bread, cakes, cookies, and retail flour.

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

Bakeries producing regulated bread in Israel are planning to petition the Ministry of Economy to raise prices, citing increased flour costs set to take effect in early November. This price hike is expected to affect not only regulated bread but also other bakery products like cakes and cookies sold in bakeries and retail chains.

Flour mills have informed their customers of price increases ranging from 10% to 15%, depending on the flour type and contract terms. Some new prices will be implemented on November 1, with others following in December. Bar-Rav mill, a major Israeli mill supplying to companies like Asom and Bonjour, 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 those destined for Israel. Consequently, flour mills are forced to source wheat from alternative suppliers in Poland and other Western European countries at significantly higher costs. The price of wheat from these alternative sources is reportedly 35% to 40% higher than a few months ago, compounded by increased sea freight costs, wheat shortages due to adverse weather in various countries, and kosher certification limitations restricting sourcing options.

Domestic wheat prices are 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 American wheat. Industry sources indicate that bakeries cannot absorb the full increase in costs and will likely pass some of 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. Unlike other pastries, bakeries need government approval to increase the price of regulated bread. Until a decision is made, they must absorb the new costs without directly passing them to consumers. This means another basic commodity in Israeli households may become more expensive. Even consumers opting to bake at home may face higher costs, as the price increase for flour is also expected to impact retail flour bags sold in supermarkets.