Millers, bakers and retailers will feel the knock- on effects of the poor harvest and will be forced to increase their prices in 2013.
One of the country's leading wheat brands Valeo Foods -- which owns flour giants Odlums -- has confirmed that wheat prices will rise next year.
Wheat production has fallen by 21m tonnes since August after poor weather conditions -- including a drought in the US and a very rainy summer in Europe.
Bakers say that wheat prices have already risen by 20pc in Ireland this year and they are expecting things to get worse in the near future.
The full effect is already being felt in the retail sector and Musgrave Retail group, which owns SuperValu, says it has already raised the costs of baked goods, and that bakers are looking for further increases.