Are increases in food prices justified?

Letter from Paul Chan Poh Hoi, Straits Times Forum 10 Nov 07;

THE report, 'Grocery bills increase as prices for foodstuffs go up' (ST, Nov 5), is just the tip of the iceberg where recent price increases are concerned.

The increases could create an unexpected burden for many middle-income families, negate the effect of salary increases and dampen the spirit of the better times.

What surprises me most is the high quantum of increase that does not seem justified. Have some suppliers raised prices more than they should?

Take the 10 per cent increase in the price of a 400g loaf of Sunshine enriched soft white bread. According to Baker's Percentage, to make bread there are four basic ingredients - flour, water, salt and yeast. If the weight ratio of flour is 100, then the percentage of water is 65, salt, 2, and yeast, 2. The magic weight number for bread is at least 169.

A 400g loaf of bread contains about 231g of flour, the rest being water, salt, yeast, oil and other ingredients.

If the cost of flour is $22.50 per 25kg, then the cost of flour in a 400g loaf is only 20.8 cents.

Before the 50 per cent increase in flour price, from $15, the same dough would cost about 14 cents. The cost of water and other ingredients is insignificant as a proportion of total material costs.

With the original price of a loaf at $1.45, it is difficult to convince consumers that the increased price of $1.60 is reasonable. Does the seven-cent increase in flour price justify the 15-cent increase in selling price?

The same analysis applies to flour-related products like noodles and cakes. I am sure a bowl of noodles contains less than 20 cents' worth of flour at the current price. However, a bowl of wanton mee at food courts now costs from $3.80 to $4, when it was $3.50 previously.

There has been a slew of price increases in the past few months. Consumers should take a closer look at the difference in prices.