Northern Foods is set to pass increases in commodity prices on to its supermarket customers.
The food manufacturer, which supplies Tesco, Marks & Spencer and Asda, will pass on 10 per cent price hikes to its customers.
Price adjustments have been agreed with supermarkets, but it was not clear how this will affect retail prices.
The company said cereals, dairy, cocoa and fats, in particular, had been hit by price increases, caused by lack of supply, and that it was braced for rises between eight per cent and 10 per cent in the full year.
Northern Foods chief executive Stefan Barden said: “The impact of these cost increases has been recovered for the second half through selling price increases to customers, although the extent to which customers pass these onto consumers and the resultant potential impact on future sales volumes remains unclear.”
Pre-tax profit for the group rose almost 38 per cent to £20.1 million in the six months to September 29, following a strong performance from its chilled division coupled with a £12m reduction in central overhead costs.
Barden said: “Northern Foods is a simpler, leaner and more competitive business following the delivery of our disposal programme in January 2007.”
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