Israel Faces Bread Price Hikes Due to Flour Cost Increases

Flour prices in Israel are set to increase by 10%-15%, a move expected to drive up the cost of bread, baked goods, and confectionery. Some milling companies will implement new prices as early as November 1. The primary driver for this price surge is the disruption of Russian wheat supplies caused by the ongoing war between Russia and Ukraine. Consequently, importers are compelled to source more expensive grain from alternative countries, as reported by Ynet. An Israeli bakery producer told Ynet that the significant price hike in flour will necessitate increased prices for their products, though the exact extent is still being calculated. "We cannot fully absorb the additional costs," the producer stated.

For the past two years, Russia was Israel's main wheat supplier. However, the conflict and retaliatory Ukrainian strikes on Russian ports and vessels in the Black Sea have severely impacted these shipments. Vessels carrying wheat and barley destined for Israel have been affected, leading some Russian suppliers to cancel orders. Israel has been forced to seek alternatives, but Ukrainian ports are also under systematic attack, hindering their export capabilities.

The Tel Aviv-based milling company "Bar-Rav," a major supplier to companies like "Osem" and "Bonjour," has already informed its clients of an 11% price increase effective November 1. In a letter to customers, "Bar-Rav" explained that due to the war and the closure of Black Sea ports, they must now purchase grain from Western Europe at prices 35%-40% higher than before. "Furthermore, wheat suppliers from the Black Sea region have terminated agreements with us as they cannot fulfill their obligations due to recent events," the letter stated. The company also cited increased costs for transportation and labor, noting that the upcoming price adjustment will only partially cover these additional expenses.

Global factors are also contributing to the rising wheat prices. Ynet reports that worldwide wheat costs have surged since the beginning of the year due to a combination of drought in Europe, the "El Niño" phenomenon in East Asia, Black Sea tensions, and shipping disruptions. Hadar Golombek, General Director of "Shtibel-Dagan," explained that they are already processing more expensive wheat after Russian suppliers canceled orders. He noted that imports from Poland are more costly, and there is a global wheat deficit alongside increased sea freight rates. Complicating matters further are Kashrut certification disagreements between major organizations, which may prevent certain alternative wheat shipments from being approved. Additionally, Israeli-grown wheat, which is now available after a drought-affected absence last year, is also more expensive, as its price is pegged to the higher cost of American wheat.

"Companies with small inventories must raise prices immediately, and we are also raising them," Golombek said, adding that negotiations with clients for price increases of 10%-15% are underway, with some adjustments taking effect in November and others in December 2026, depending on the type of wheat and contract terms.