By AZE.US
The wholesale price of a 50-kilogram bag of flour in Azerbaijan has increased by between 0.20 manat ($0.12) and 1.10 manats ($0.65) since the beginning of the year, raising concerns that bread and other flour-based products could become more expensive.
The increases have been recorded across several retail and wholesale locations, AZE.US reports.
Economist Khalid Karimli said flour is a key raw material for bread, pastries and a wide range of food products. As production costs rise, manufacturers and retailers will likely try to pass at least part of the additional expense on to consumers.
However, the impact will not be uniform across all products. In highly competitive segments, businesses may be unable to transfer the entire increase to buyers and could absorb part of it through lower profit margins. Where demand remains strong, a larger share of the added cost may be reflected in retail prices.
Karimli said the rise in flour prices should not be attributed solely to domestic market conditions. Azerbaijan’s grain and flour market remains sensitive to global commodity prices, transportation costs and changes in foreign supplies.
Developments in the Black Sea region are among the factors creating uncertainty. The continuing Russia-Ukraine war, risks to commercial shipping and disruptions to maritime transportation can increase freight costs and affect international grain supplies.
The Black Sea is one of the world’s most important grain-export corridors. Any threat to the security or reliability of shipments can tighten supply and drive up costs for importing countries, including Azerbaijan.
The latest increase in flour prices is still relatively modest. Whether it leads to a direct rise in bread prices will depend on global grain markets, logistics costs, competition among producers and how much of the additional expense bakeries are prepared to absorb.
AZE.US