A summer surge in prices is looming at grocery stores and restaurants, as the bread industry is warning of a perfect storm that could spark sticker shock at checkout.
The H&S Bakery in Baltimore, which makes and ships breads to grocery stores and restaurants across the East Coast, said it’s scrambling as ingredients are increasingly in short supply.
“You’re going to see another increase in July that’s going to impact another 35% increase on flour,” said JR Paterakis, the co-owner of H&S Bakery. “That’s strictly related to Ukraine-Russian war.”
The war has disrupted production of wheat, oats and cooking oils in a nation considered the “breadbasket of the world.” Ukraine and Russia produce 25% of the global wheat supply, but the Russian invasion has halted much of the production.
There are still some reserves, but they’re dwindling quickly. Supply chain disruptions, a shortage of workers partly fueled by the pandemic, and the increased cost of gas are driving up delivery costs, which is contributing to the price surge expected this summer.
“Unfortunately those costs have to be borne by consumers,” said Robb MacKie, the president and CEO of the American Bakers Association. “And the most vulnerable in our society are going to feel that more than anybody else.”
At mom-and-pop shops like Stella Kouros’ bakery in Rockville, Maryland, it’s not just flour in short supply.
“The milk, the cream… chocolate went up, too,” Kouros replied when asked what prices have gone up.
She expects to raise prices at her bakery, which has been open for 30 years, in August. Kouros calls the decision anguishing with only a slight profit margin and customers potentially unwilling to pay.
“In the past, my [price] increases were many years apart. Now I have done this twice since COVID and probably will have to do it again, unfortunately,” Kouros said.
The industry has been leaning on the government to free up more U.S. land to grow wheat and top more oil and natural gas to lower fuel costs. But, in the short term, they’re scrambling for replacement ingredients and angling for wheat and flour produced outside of Ukraine.