Bread prices tipped to rise as Aussie drought dries up wheat supply

New Zealanders are likely to soon be paying more for bread, as the Australian drought continues to slow the production of wheat.

New Zealand bakeries are heavily reliant on wheat from Australia, which is in the grip of its worst drought in more than a century.

Bakers Association President Kevin Gilbert said wheat prices have gone up by as much as 27 percent in the past six months.

He said other factors are making it tough for bakeries to absorb the price increase.

"When you compound that with the increasing transport costs, wage increases, dairy price increases, it just gets quite hard for bakeries to absorb," he said.

He said it was likely bread prices would have to go up.

"Realistically the prices are going to have to go up, but it's going to be down to each baker and bakery to decide when enough is enough for them," said Gilbert.

"Some may have more fat in their prices than other, for example plant bakeries, their margins are very, very slim, so there isn't that much room to move."

RNZ reported that Foodstuffs New Zealand, which owns the New World, Pak'n'Save and Four Square brands, has confirmed that suppliers have signalled prices for bread are going to rise.

They cited the decreased availability of wheat and greater demand for wheat-based products around the world.

Meanwhile Kevin Gilbert said while New Zealand is starting to produce more wheat, it wasn't enough to service the New Zealand baking industry. 

"Historically we haven't grown particularly  good wheat for baking usage, for various reasons, mostly climatic."

"Over the past decade we have got a lot better, but it's still not enough."