Associated British Foods (ABF) said yesterday that further price rises on everyday products such as bread were almost inevitable as it gave warning of a possible £400million increase in operating costs this year.

The group, home to Kingsmill, Primark and British Sugar, said that it was facing unprecedented pressure from a sharp rise in the cost of energy and basic global commodities such as corn oil and wheat.

John Bason, its finance director, said that shoppers in Britain were likely to see yet another rise in the price of a standard loaf, despite a near-15 per cent increase since the autumn. Kingsmill has risen from 96p to £1.09.

“With wheat prices where they are, it is very likely,” Mr Bason said. “All the commodities are going up and by a large percentage. These are unusual times.”

Separate figures showed that prices of staple products in Tesco, Asda and Sainsbury had soared in the past year, with free range eggs up by 47 per cent, basmati rice rising more than 60 per cent and fusilli pasta 81 per cent higher.

Wheat prices have doubled in the past year because of a combination of poor harvests and rising demand in the Far East. The price of corn oil has almost tripled in the United States as more farmland is given over to biofuels.

ABF said that it had suffered a £150million rise in operating costs - nearly 5 per cent - in the six months to March 1, the first half of the group's financial year.

Mr Bason said that the increase over the full year could be as much as £300million to £400million.

Underlying pre-tax profits across the group rose 5 per cent to £282million in the six months to March 1 as it benefited from the continuing growth of Primark and its ability to pass most of the higher costs on to retailers.

Profits in ABF's grocery division, home to Allied Bakeries, Twinings Tea, Ovaltine and Ryvita, rose by £24million to £88million. Total group sales were 15 per cent higher at £3.7billion.

Mr Bason said: “The very fact that our profits are up shows that we have been able to recover the cost increases. When you get inflation like that, you have to go out there and recover it. The only area where we have been behind the curve is with oils in the US, where profits went down.”

Mr Bason insisted that it was too early to say that the world had entered a “new era” of higher food prices, despite the inflationary pressure.

He said: “Let's see - I don't think that all the cost increases will continue. The thing is there are different pressures on different commodities. Wheat we think is much more of a supply problem. Sugar doubled in 2006 then halved in 2007.”

Profits at ABF's sugar business fell 33 per cent, given higher energy costs, a smaller crop in Britain and China and the last main mandatory quota reduction from the European Union.

Shares in the group, one of the best performers in the City this year, fell 16p to 873p.

Polly Barclay, a Cazenove analyst, said: “While our inclination is to be positive on the AB Foods' shares, we maintain our ‘in-line' rating following a good performance in the stock.”

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