The price of the humble plastic bag is to rise after a bout of hefty price increases by chemicals makers that supply the plastic packaging industry.

Dow Chemical, America's biggest manufacturer, announced price rises of up to 20 per cent last month, complaining of a 42 per cent increase in feedstock and energy costs since the beginning of the year. Dow was followed by BASF, of Germany, and Arkema, of France, while SABIC, the Saudi chemical group, said that it would increase its polyethylene prices by €200 (£157) a tonne from July 1.

Even as the rising cost of food is passed on to consumers, price pressure is mounting again as manufacturers witness soaring plastic packaging costs.

The source raw material for plastic bottles, food and drug containers, polythene film and bags is ethylene, a volatile gas that is made by naphtha, a by-product from crude oil refining, or ethane, found in natural gas. As the crude price soars, makers of bulk chemicals suffer cost increases, which are now being passed on by chemical companies.

British packaging firms are suffering too, including Rexam and British Polythene Industries (BPI), which last month gave warning of a profits slide as it struggled to pass on the cost of raw materials. Cameron McLatchie, the chairman of BPI, which is closing a loss-making unit in Essex, said: “I have never seen the price of plastic film rise so high. Our raw material has more than doubled.”

The BPI chairman said that plastics product manufacturers are worse off in Europe, where the EU puts a 7 per cent tariff on polyethylene imports. While most of Europe's ethylene is sourced from expensive naphtha, petrochemical firms in the Gulf can use natural gas available at prices that are a fraction of the cost of gas in Europe. “The people producing this [material] from gas in Saudi Arabia are making a lot of money,” Mr McLatchie said.

Dow Chemical said that its feedstock and energy costs would reach $32 billion (£16 billion) this year, up from $8 billion in 2002.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive