Toronto-based food processor George Weston Ltd. served notice Thursday that higher consumer prices are on the way.

The company, which owns baker Weston Foods and retailer Loblaw, said it will increase prices by five per cent as of April 1, in order to pass on rising commodity costs.

Climbing prices of key product ingredients like wheat, sugar and vegetable oil, plus higher transportation costs could have a negative impact of up to $65 million this year, it said, adding that the prices of some of these items have shot up as much as 50 per cent in recent months.

The comments came as the firm reported that fourth-quarter profits grew 23 per cent to $101 million, or 70 cents a share, despite a small decline in sales. That compared with $82 million, or 52 cents a share on the same period a year earlier.

"We would expect to recover these commodity cost increases in the back three quarters of the year," Ralph Robinson, president of Weston Foods Canada, said during a conference call.

"If commodity costs remain at these levels, we would be looking for some more pricing in the back end of the year."

The general rule of thumb is that it takes six months to a year for higher commodity prices to then be passed down to the retail level, Derek Burleton Deputy Chief Economist TD Bank Financial Group told CBC News.

Only beginning to see inflation

"It was really the fall of this year that prices for grains like wheat had begun to skyrocket and so we're just beginning to see the impact of that passed through to the retail level," Burleton said.

"The hope is, of course, that a lot of these prices will begin to pull back as we move through the year," in order to head off inflation, he said, "but of course that has not yet begun to happen."

"Our general view is that inflation in food in Canada is likely to pick up further as we move forward."

With files from The Canadian Press