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Inflation grips Europe: Bread prices Skyrocket

Since Russia’s invasion of Ukraine, the price of the wheat Julien Bourgeois grinds for Boulangeries at his family’s flour mill in central France has risen by more than 30%. The cost of running the mill’s power has tripled. Even the cost of the paper used to make flour bags has skyrocketed.

These factors collectively are increasing the cost of a loaf of bread. Bourgeois said, “Inflation is brutally high.” To make up for the extra costs that he has had to pass along, he has advised the 1,000 bakeries that his firm, Moulins Bourgeois, supplies to mark up the well-known French baguette by 10 cents from its current price range of one euro to 1.30 euros ($1.27).

Consumers are currently able to spend more, but prices will continue to rise, according to Bourgeois. It’s worrisome, he said, adding that “we recall that the revolution started over the price of bread” in France, where baguettes already cost more than 8% more than they did a year ago.

Few things are generating greater alarm than the cost of a basic loaf of bread as inflation continues to rage across Europe. According to a report released on Wednesday by Eurostat, Europe’s statistics agency, prices for the most important food staple have never been higher and are currently up about 19 per cent from a year ago, the fastest increase on record.

According to Eurostat, the rise is largely attributable to Russia’s war in Ukraine, which has agitated energy markets and raised the cost of cereals, oilseeds, and fertilizers.

This has exacerbated the price shock many are experiencing for food and other needs. Consumer prices in Europe increased quickly in September compared to the same month last year, rising by over 11% overall and 10.1% in Britain. Food costs increased by over 14% in the EU and over 14% in the UK, while energy prices rose by almost 40% in both regions.

The United States is also concerned about high consumer prices. Despite the Federal Reserve’s efforts to slow the economy, inflation is still running at a nearly four-decade-high rate. Even there, the cost of bread has increased by 15% since last year.

Policymakers and economists are becoming more concerned about price increases getting ingrained and becoming more difficult to control as a result of the wide-character of inflation.

A higher expense is being passed on by food companies. In comparison to the same period last year, the multinational food corporation Nestlé reported raising prices by 9.5 per cent in the third quarter, up from a 7.7 per cent increase in the prior quarter.

People are immediately affected by increases in bread prices. The closest nations to the conflict have felt the pinch the most, particularly Hungary, where the price of a basic loaf increased by 77 per cent in September from the same month last year, per Eurostat. Bread costs have increased by more than 30% in Slovakia, Croatia, Estonia, Latvia, and Lithuania.

In Germany, where the price of bread has increased by more than 18% in a year and overall inflation has gone up to double digits, reaching 10.9 per cent in September, the whirlwind has come as a shock.

According to an employee named Alice Zuza, Berlin’s Fine Bagels recently increased the price of its New York-style bagels from 1.10 euros to 1.20 euros. At the bakery, there was a discussion, according to Zuza. The owners opposed price increases, but ultimately there was no other option.

The propensity of Russia to use energy as a weapon against nations who support Ukraine has worsened issues by increasing the cost of gas and electricity for flour suppliers. Energy-dependent businesses’ bills are also surging, including thousands of industrial and speciality bakers that use their ovens continuously throughout the day.

Since the end of the summer, a phalanx of bakeries has closed their doors in the Netherlands due to rising energy prices. In Belgium, bakeries are hiking prices, yet one in ten has had to close, and more closures are anticipated before the year is up.

Commercial bakeries are not exempt. By bargaining with suppliers over the price of ingredients and energy, major European supermarkets that sell enormous amounts of bread have attempted to artificially keep costs low to entice customers. But because of inflexibly high costs, many had to raise their pricing.

The rising cost of living in Europe is forcing workers to demand greater wages, which raises the cost of doing business in that region. Owner of the famed Arán Bakery in Budapest’s 7th District, Attila Pécsi, claimed to have increased the pay for his 30 employees twice this year. A loaf of bread costs about half as much as payroll costs. Energy and raw materials make up the remaining third.

Pécsi has increased bread prices by 12% since January due to rising costs. Before the year is out, he intends to raise the price once again. And consumers expect more, he said. This is because, according to Johan Sanders, president of Fedima, the European organization of bakery suppliers, prices are unlikely to decline.

We haven’t had inflationary consequences in staple goods in many years, according to Sanders. It’s intimidating because it’s inevitable and because it will be challenging to keep costs from rising.

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