Premier Foods announced an increase in the price of its Hovis bread today and said there may be more increases if wheat prices stay high.
Shares in the Britain's biggest food producer, which have fallen as much as a third in value this year, rallied over 5 per cent in early trade amid hopes it will be able to limit the damage from a near doubling in the price of wheat over the past 12 months.
But some analysts said they would still trim their full-year profit forecasts following a halving in profits from Premier Foods' bread business in the first half.
Premier Foods declined to say by how much it was raising bread prices.
But Chief Executive Robert Schofield said a major retailer had increased the price of a white loaf by eight pence, taking it to over one pound. He said rival bread makers Associated British Foods and privately owned Warburton would follow suit.
Premier Foods said operating profit before goodwill and one-off items more than doubled to £96.8 million (€143 million) in the six months to June 30th, boosted by acquisitions.
Forecasts ranged from £95 million to £98 million in a Reuters poll of eight analysts. But underlying operating profit at the group's bread business halved to £19 million.