US bakery products PPI rose 3.3% year-on-year in May
14 June 2012
FACTS: The May increase in US bakery products PPI was in line with consumer foods overall.
ANALYSIS: The relationship between changes in bakery input costs and bakery selling prices suggests that the commodity cost pressure in US bakery is easing. In May, the PPI or factory gate prices for the baked goods sector rose by 3.3% year-on-year (yoy), matching an increase in consumer food prices generally. Also in May, there were some notable yoy falls in bakery input costs. The flour price fell 4.9% and processed eggs declined by 9.6%.
DAVY VIEW: A further indicator of the improving margin circumstance for the sector is the yoy change in ingredient costs for standard recipe products. As of June 8th, the ingredient cost of white pan bread was 18.9% lower yoy while the recipe cost of cake doughnut was 15.9% lower. For all this, it remains a challenging environment due to lack of volume growth across many categories.