Peter O'Brien, the owner of O'Brien's Wagga Hot Bake, said the increase in flour prices will leave local shops, like his, at a loss. 

“I have been here 40 years and a 25 to 30 per cent price increase of our major ingredient is a big hit,” he said.

“Not just for us, but for other bakeries around the area. 

“That’s not going to be on just flour, but on cake mixes and all different things like that and it’s going to be very hard on small businesses to keep prices reasonable for customers.”

Mr O'Brien said flour mills have informed him that the inflation is because of the drought and the major price increase leaves them with few options.

“We just can’t put our prices up 30 per cent,” he said. 

“We definitely will have to look at some avenues.

“I believe that it is a tough game out there for all families with electricity and other bills so I think people will pull back from spending as much.” 

Mr O'Brien said as a business they have tried to be competitive with pricing. 

“With our shop, we are not in a busy mall so people have to walk here,” he said. 

“We are going to be so nominal in how we raise the prices and we actually won’t cover costs with these small price rises, but we just have to get something yet.

“I haven’t decided on the changes yet, but it will be very minimal and I don’t want to lose customers because of it.” 

Andrew Woodhouse, manager at Advance Trading, said the drought has impacted the supply of wheat. 

“We just don’t have enough wheat on the east coast to meet demand,” he said. 

“A lot of the grain is coming out of South Australia and Western Australia to meet the market and that will continue. 

“Normally we don't ship grain out over Australia at all.”

Mr Woodhouse said the production of wheat is the worst in 10 years and possibly since 1994 and the flow-on effect is also impacting the stock and feed industry. 

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