Greggs warns of further price increases

Bakery chain Greggs has warned that its prices could go up for a second time this year as it faces surging costs.

Higher prices for food, energy and staff, plus tax changes, mean its own costs will rise by between 6% and 7% it said.

The chain, known for its sausage rolls and steak bakes, put prices up at the start of the year, and it expects "further changes" to be necessary.

It comes as households face the fastest increase in prices for 30 years.

Greggs said the price of raw materials had gone up while energy prices are soaring. While it has locked in prices for some commodities ahead of time, it said future costs remain "uncertain".

Energy prices around the world began to rise sharply as economies started to recover from the coronavirus pandemic, and have surged further as Russia's invasion of Ukraine continues.

Greggs said rising costs "necessitated some price increases, which were made at the start of this year, and further changes are expected to be necessary".

"As ever, we will work to mitigate the impact of this on customers, protecting Greggs' reputation for exceptional value in the freshly-prepared food-to-go market.

"Given this dynamic, we do not currently expect material profit progression in the year ahead."

Greggs share fell about 9% after its announcement.

Despite the warning on price increases, Greggs chief executive Roger Whiteside said the company would weigh up price changes before bringing them in.

"We've got no plans to raise prices currently, but obviously that's going to have to remain under review given the way the markets are moving around the world on commodity food prices in particular," he said.

"If the market allows price increases to move onto customers, then we will have to attempt to do that, if it doesn't then we won't be able to," he added.

The business swung back to a profit last year after taking a hit in 2020 when many of its shops were closed for much of the year due to the pandemic.

The chain notched up a £145.6m profit before tax, from a loss of £13.7m the year before.

Sales rose 5.3% compared with 2019, the year before the pandemic, reaching £1.2bn.