Bread, your quick-fix breakfast solution, set to become costlier by 15% this month

Your quick-fix breakfast solution, a slice of toasted bread, is set to become costlier starting this month.

The rising cost of production is forcing bakers to increase the price of bread and bun by at least 15%.

"We are sandwiched," says B S Bhat, the owner of Beekays Food Product in Bengaluru. Bakers have been dealt a blow too many this past year, he adds.

"First, there was demonetisation, then came the Goods and Services Tax (GST). Though bread and bun are exempted, the ingredients we use are mostly in the 5% tax slab. We use diesel for the ovens to bake our goods and its prices have also increased in the past few months," he said.

Higher diesel prices have affected not just the oven but also pushed up transport costs.

Recently, another blow came in the form of increased import duty on crude and refined palm oil. Girish Rao, the director of Good Bread Limited, said that had increased the cost of important ingredients like vanaspati and palm oil by 22%.

"In a week's time, we will be increasing the price of our goods by 15% to 18%. For items which require more manual labour, the price will be hiked by 18% and those which involve more machines will be 15%," Rao said.

Bread and bun are goods with very low profit margins. One loaf of bread fetches a profit of only about Re 1 to Re 1.5, said the manager of a factory unit of a bakery chain in the city.

"The industry is bleeding. The cost of producing a loaf of bread is now at least 20% more than the maximum retail price. We are running at a loss. We have to increase the cost by Rs 5 per loaf to bring the profit margin back to what it used to be," the source said.

All bakery items?

While some are only looking at costs of bread and bun, others may increase the prices of all bakery items to factor in the higher cost of labour now.

Recently, the state government increased the minimum wage for bakery employees from Rs 7,900 to about Rs 11,500 for unskilled workers.