Flour Price Surge Drives Greek Bread and Pasta Inflation

The Greek government's recent price cuts on 1,740 products have been met with a different message from the country's largest flour mills. Industrial food manufacturers and artisan bakeries were informed that flour prices would rise by 40 euros per tonne, an increase of roughly 10%, which could lead to fresh inflationary pressure on everyday staples like bread and pasta.

The price hike is due to disruptions in global grain markets caused by Russian attacks on Black Sea ports, cutting off a key export route for Ukrainian grain. Low water levels on the Danube have also reduced river transport capacity, and drought across Europe has damaged harvests, prompting grain holders to delay sales in anticipation of even higher prices.

Wheat prices on the French commodities exchange have risen sharply since February's Middle East conflict, from 203 euros per tonne to a high of 256 euros before easing slightly to 248 euros. The latest flour price increase is partly due to rising transport costs and increased production expenses, with around 10 euros reflecting higher freight costs.

Greece remains self-sufficient in durum wheat but this year's poor-quality harvest has led pasta makers to import higher-grade grain from Canada at a significantly higher cost. This could lead to increased prices for pasta, and once industrial bakeries' annual supply contracts expire, they too may face higher retail prices.