Bread Prices Skyrocket as Inflation Grips Europe

Since Russia’s invasion of Ukraine, the price of the wheat that Julien Bourgeois grinds for boulangerie in his family’s mill in central France has risen by more than 30%. He tripled the cost of the electricity needed to run the factory. Even the price of the paper used to make flour bags is stratospheric.

All of this drives up the price of bread.

“Inflation is very high,” said Mr. Bourgeois, looking into the factory’s giant mills as it mills wheat. in his 1,000 bakeries, Moulin Bourgeois, He raised the price of the iconic French baguette by 10 cents from €1 today to €1.30 to offset the higher costs he had to pass on.

“Consumers can afford to pay more for now, but prices will continue to rise,” Mr. Bourgeois said. “It’s worrisome.” In France, where baguette prices are already 8% higher than they were a year ago, “I remember the revolution starting over the price of bread,” he added.

As inflation continues to accelerate across Europe, few issues are causing more concern than the cost of basic loaf. From France to Hungary, the most important staples are more expensive than ever. the price of bread rises According to Eurostat, the European statistical agency, it averaged an 18% year-on-year increase.

Grocery prices across the board have soared to record levels and household spending has dwindled, reflecting the biggest rise in inflation in decades. Across the 19 countries that use the euro, consumer prices rose 10% in September from his August record of 9.1%.

Eurostat is due to release updated figures on Wednesday.

High consumer prices continue to be a concern in the US as well. Inflation continues to rise at a pace close to his 40-year high despite the Federal Reserve taking aggressive policy steps to cool the economy. For example, US bread prices rose nearly 15% for the year through September.

According to Eurostat, the war in Ukraine is making matters worse, disrupting food and energy markets and pushing up prices for grains, oilseeds and fertilizers, all of which affect bread prices.

Hardest hit are the Baltic and Eastern European countries close to the conflict, which depend on grain exports from Europe’s largest agricultural land, Ukraine. Bread prices have jumped an average of 66% in Hungary and more than 30% in Lithuania, Estonia and Poland, according to Eurostat.

The sharp rise in prices hit Germany, where inflation soared into double digits, reaching 10.9% year-on-year in September.

Berlin bakery Fine Bagels recently increased the price of its New York-style bagels from €1.10 to €1.20.

“There was an argument at the bakery,” Zuza said. “The owner didn’t want a price increase, but in the end we had no choice.”

Russia’s willingness to use energy as a weapon against countries backing Ukraine has caused problems by raising gas and electricity costs for flour suppliers. including thousands of industrial and craft bakeries that run their ovens most of the day.

In Holland, many bakeries have gone out of business as energy costs have skyrocketed since the end of summer. Bakeries in Belgium are raising prices, but one in 10 of his has been forced to close, and more are expected to close by the end of the year.

and Verzelio Duona, Vidas Baranaukas, an artisan bakery in northern Lithuania, tried to avoid a similar fate. This year, he has raised prices by 33% to his €12 a loaf to offset surges in the prices of flour, sunflower oil and sugar. The dried fruits and seeds used in some breads cost twice as much as him.

To keep utility costs down, Baranaukas covered the roof with solar panels. But as winter approached and the skies darkened faster, he had to buy electricity at a price that was 500% higher for him than it was a year ago. He and his six employees keep the oven running his four days a week instead of his five to save money.

“This has never happened before,” said Varanaskas. “It’s a difficult time when many companies have to choose whether it’s right for them to go ahead with production.”

Industrial bakeries are no exception. Europe’s major supermarkets, which sell bread in bulk, have tried to keep prices between 30 and 50 cents per loaf by negotiating with suppliers how much they pay for raw materials and energy. However, the stubbornly high cost has forced many to raise their prices. In Hungary, where most bread is sold in supermarkets, prices have more than doubled last year, according to Eurostat.

Inflation is also increasing the cost of doing business in Europe by pushing workers trying to make a living to demand higher wages as the cost of living soars.

Owner Attila Pech alan bakeryThe , located in Budapest’s popular 7th district, said it has raised salaries for 30 employees twice this year. The labor cost is about half of one loaf of bread. Raw materials and energy account for another third.

Amid rising costs, Mr. Petchi has raised the price of his bread by 12% since January. He plans another increase by the end of the year. And consumers expect more to come, he said.

This is because prices are unlikely to retreat, said Johan Saunders, president of Fedima, the European bakery suppliers federation.

“It’s the first time in years that we’ve seen the effects of inflation on staple foods,” Sanders said. “It’s daunting to think about staying, and it’s going to be hard to get the price down.”

Mr. Bourgeois, in a flour mill outside Paris, was prepared for just that. The Russian war has already prevented Ukrainian farmers from planting enough crops for 2023. “Our destiny has a lot to do with war,” he said. “If it continues, grain prices will stay high for a long time.”

Moulin Bourgeois production costs jumped 30% in one year. Electricity bills alone will rise quickly from €50,000 in 2021 to €200,000 per month. Mr. Bourgeois spends countless hours managing the economy of a business that began with a millstone powered by his one waterwheel installed by his great-grandfather. Founded in 1895, today he has 18 silos on 6 acres and is an automated operation capable of grinding 450 tons of wheat per day.

Recently, he sent a brooding letter to the 1,000 bakeries he serves. It started with “Dear Customer”. “Prices for commodities and energy have never been as high as they are today. We have an obligation to raise prices on November 1st. We recommend raising prices to make up the difference — 10 cents per baguette is reasonable .”

At a popular boulangerie in the leafy village of Crécy-la-Chapelle, 40 minutes north of Mr. Bourgeois’ mill, owners Serge and Marie Pinguet were trying to postpone a fateful day.

“In France, when the price of bread in a street corner bakery goes up by even five centimes, people notice it right away,” says Pinguet, who says lines of customers, drawn by the smell of freshly baked baguettes, line up outside the door. I said when I came out while meandering.

The couple hasn’t increased the price of their baguettes for now out of fear that even loyal customers might turn to the supermarket.

“Prices are changing very fast,” said Pange, who starts making the dough for the morning rush at 2 a.m. each day. The price of butter he doubled in a year to €12 per kilo while sugar is now 30% more expensive. Mr. Pange now pays from €39 to €78 for a carton of 360 eggs.

The divine baguette is still affordable, but “with all commodities on the rise, prices will continue to rise, not just this year, but probably for the next two to three years.

“And if the price goes up too high, people won’t be able to afford it,” Pinge said. “It’s a vicious cycle.”

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