Associated British Foods became the latest food producer to bow to higher wheat costs yesterday by revealing that it was in talks with Asda and Tesco about increasing the price of its Kingsmill bread.

John Bason, the finance director of AB Foods, said: “It is not a matter of if but when. We are subject to the same pressures as the rest of the industry.”

Mr Bason refused to divulge the size of the price rise, but it is likely to reflect the 8p increase forced through by Premier Foods last week for Hovis. A standard white Hovis loaf now costs more than £1 and the Kingsmill equivalent is 96p.

Wheat costs worldwide have doubled in the past year after a run of poor harvests and shortages caused by the amount of farmland now being used to grow biofuels.

In a trading update, AB Foods said that profits at its grocery division in the past year had fallen, despite market-share gains by Kingsmill.

Bread prices rose in February but Mr Bason said that Britain was in a “new era” of food inflation, given price rises for wheat, vegetables and dairy, as well as for corn and soy oil.

Shares in the group fell 8½p to 828½p as the group added that operating profits over the financial year to September 15 would also be hit by £19 million of currency costs, given the strong pound and weak dollar.

The gloom overshadowed further growth at the discount fashion chain Primark, where AB Foods said that sales and profits would be “substantially ahead” of last year.

Like-for-like sales growth in the past six months was 1 per cent up on the same period a year ago, although the chain was forced to discount summer stock to clear the shelves.

Profits from AB Foods’ sugar business were “strongly ahead” of a year ago after a substantial rise in profits generated in China.

Across the group, adjusted earnings are expected to rise in line with expectations.

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