If you thought the Russo-Ukraine war isn’t going to affect us, think again.
The war has raised the prices of bread in Singapore, and it’s only going to keep increasing. Here’s why.
Prices of Bread has Increased By 10 to 20 Cents
Bread prices in supermarkets and bakeries have increased as compared to prices in January.
The Straits Times reported that a 600g loaf of Gardenia Enriched White Bread costs $2.60, up from $2.40.
A 550g loaf of Sunshine Enriched Soft White Bread now costs $2.30, up from $2.10. A 500g loaf of Top One Enriched White Bread has also risen from $1.60 to $1.70.
But why are bread prices increasing?
Rising Costs of Raw Materials, Electricity
Supermarket chain FairPrice stated that the costs of raw materials, key ingredients, packaging, supply chain and labour has been rising. This would explain why some brands have increased their prices by about 5%.
Bakeries and bread suppliers interviewed by The Straits Times have also said that the pandemic and rising raw materials costs have forced them to increase prices.
Additionally, the prices of wheat, the main grain for flour, has been rising as its exports have been limited by the Russo-Ukraine war. Russia and Ukraine account for 29% of global wheat exports.
Even though Prima, Singapore’s only flour mill, doesn’t use wheat from the two countries, the conflict will still lead to rising prices of wheat globally. This is because as the supply of wheat falls drastically while the demand for wheat stays the same, the market price of wheat rises.
Since wheat is really important to make flour, the price of flour will thus increase as well, and the price increase reaches the bakeries. For instance, a 25kg bag of flour has increased by $2 to $3, and now costs between $28 to $35.
But it isn’t just the price of materials. Electricity tariffs have also impacted bakeries significantly, adding even more cost pressure on them. For instance, Clementi’s The Emerald Bakery has faced a spike in its electricity bill, from $2,000 to $3,000 a month to $6,000 or even $7,000.
With so many costs rising and adding up, it is no surprise that many bakeries and bread suppliers are increasing the costs of their products if they can’t juggle the costs on their end.
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Major Suppliers May Not Increase Prices
Although the prices of bread have generally been rising, FairPrice has been able to keep their bread at the same price.
This is likely due to FairPrice having internal economies of scale: by producing a variety of goods, they can offset the rising costs for bread through the profits or cutting costs of other goods. They also operate at a much larger scale than small bakeries do, so they’ll be able to reap the benefits of lower costs of production.
And, of course, many of us will end up switching to buying their bread when it ends up being cheaper, since bread is easily substitutable amongst brands. So they’ll recoup their losses in the long run.
DFI Retail Group operates Cold Storage, Giant and 7-Eleven in Singapore. It said that all of its prices are adjusted according to market trends, and it will keep on providing competitive prices.
It’s also worthy to note that this impact may not be limited to just bread, and that the prices of other food may also start rising. You can download Price Kaki, an app by the Consumers Association of Singapore, to compare the prices of goods to see what’s rising next.
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