The rise and rise of Europe's bread prices amid the war in Ukraine

The rise and rise of Europe's bread prices amid the war in Ukraine

Bread prices have risen sharply across Europe over the past year, new data reveals, with the increase particularly steep since Russia's invasion of Ukraine.

They were on average 18% higher in August than a year before, according to Eurostat, the EU's statistical agency.

In August last year, average increases in EU bread prices were at just 3%.

Eurostat says bread prices are at their highest level.

Hungary has been the worst hit - it saw a huge 65.5% rise over the year, while France, famous for its baguettes, has seen the slowest growth in prices.

Russia's invasion and the blocking of grain exports from Ukraine -- which was the world's fifth largest exporter of wheat -- have seen prices surge.

Bread is not the only product that has seen a sharp increase in price. The combined prices of bread and cereals have increased by 16.6% in the Eurozone, the highest rise since January 1997.

Maybe unsurprisingly, the rising cost of food and energy prices has also contributed to higher inflation, together with skyrocketing energy prices. In the European Union, inflation hit a record high in the month of August, reaching 9.1 per cent. As a frame of reference, the goal and mission of the European Central Bank is to keep inflation “close but below” 2%.

Food and beverages saw the second highest increase, at 12.4%, after housing and electricity, which experienced a 19.7% increase.

Why are bread prices soaring in Hungary?

Even before the beginning of the war in Ukraine, in January, Hungarian bakers had warned customers that mills would significantly raise the price of flour, as reported by HVG, suggesting that Hungary was already facing challenges prior to the conflict.

Between August 2021 and August 2022, Hungary had its driest months since 1901, a situation that was exacerbated by unprecedented temperatures this year, which destroyed crops across the country.

As the country’s fields turned yellow and water levels in its rivers and lakes dropped to alarming lows, agriculture suffered significantly.

József Septe, the president of the Hungarian Bakers' Association, hasn’t ruled out that the price of bread might reach HUF 1,000 (approximately €2.50 per kilo), as several products have already reached the same price.

Hungary is among the EU countries with the highest inflation. The average EU inflation rate in August was 9.1%; in Hungary, it was 15.6%, the highest since May 1998.

Food prices in the country are now up 30.9% compared to the previous month, according to Trading Economics.

What impact is this price increase having on people?

European households are feeling the squeeze of these price increases. According to data from the Federation of Bakers, the trade association representing the UK Bread and Bakery industry, most countries in the EU have an average consumption of 50 kg of bread per person per year.

But while it’s hard to find a replacement for bread and other wheat products, pillars of the diet of millions of Europeans, the price increases are already having an impact.

In Italy, where the average price of bread has risen by 13.5 per cent from August 2021 to August 2022 and bakers’ unions have warned that it could still rise to €6 per kilo in the near future, data shows that in the first seven months of 2022 consumers reduced their grocery shopping by 3.2%. But because of inflation, households are still spending more on groceries than they did before.

According to data from the European Commission, rising inflation between January 2021 and June 2022 has increased the cost of households’ per capita consumption by around €160 per month on average.

As food prices continue growing, Brussels worries that households on lower incomes will suffer the most, as they will have to spend a larger share of their budgets on basic items like bread.