Fears that the spike in global wheat prices could indicate an alarming upward trend in costs for food retailers have been downplayed.
Wheat prices rose throughout July, reaching a 22-month high of just under $8 (£6) per bushel at the beginning of August - an increase of 50 % in a month.
The heatwave and drought that has hit the world’s fourth largest wheat exporter Russia this summer, and led to devastating fires in much of the country, has hit forecasts for the crop yield this autumn resulting in the wheat price spike.
But Shore Capital food retail analyst Darren Shirley said that while last month’s market pressure was likely to lead to some limited cost inflation for retailers, the picture is “not as bad as the forecasts”.
He said: “There’s probably four months’ of stockpiled wheat at the moment. It looks as if it’s going to be enough to go around and probably a bit more.
“Prices will be higher but they won’t be as high as the recent spike is indicating. The rise will be manageable.” Prices have already begun to fall from last week’s high, as buyers look to the US to relieve pressure on Black Sea demand.