The price of bread could rise by as much as 10 per cent as poor harvests continue to drive up the price of wheat and flour, the Irish Bread Bakers Association (IBBA) has warned.

Wheat prices have surged to 10-year highs as world wheat stockpiles have fallen to their lowest levels in 25 years, the IBBA said.

Bread bakers are experiencing increases of up to 25 per cent in the cost of flour, the main ingredient in bread.

"Obviously it's a commercial issue between individual bakers and retailers but, bearing in mind those major increases of 25 per cent in flour costs, we would estimate that you could potentially see increases of up to 10 per cent," said Paul Kelly, director, Food and Drink Industry Ireland, speaking on behalf of the IBBA.

Mr Kelly said that the soaring flour prices come on top of increases of more than 30 per cent in the cost of gas, the main energy source in baking bread.

"While IBBA members are committed to keeping prices low, the major increase in the cost of flour comes at a time when other business costs are rising much faster than general inflation. Price rises are the inevitable result of these dramatic upward pressures. Regrettably there is no alternative option open to the industry in this regard," he remarked.

Despite cutting costs and the use of the most modern production technologies, a number of Irish bakeries have either closed or significantly rationalised their businesses in the past two years, said Mr Kelly.

"Failure to recoup these now serious cost increases in the market place will inevitably lead to further rationalisation and job losses."