Premier Foods, the maker of Mr Kipling cakes and OXO cubes, said today it will raise prices of its products as part of plans to tackle rising costs of wheat, dairy and fuel.

This comes after the company reported an annual profit that surpassed its forecast.

The group, which also hiked dividends by 20% after its Mr Kipling brand enjoyed its best year ever, said it was gaining market share as consumers seek good value-meal solutions amid Britain's cost-of-living crisis.

Premier Foods sells a range of products - from plain flour to cakes and cooking sauces to quick meals - through supermarkets, convenient stores, and discounters as well as other channels mainly in the UK.

The grocery sector's outlook has been weighed by the costs-of-living crisis in Britain and supply disruptions from the war in Ukraine.

Big supermarket groups including Tesco and Sainsbury's have warned of lower profits this year.

Although Premier Foods does not have any direct exposure to Russia or Ukraine, it said it would be affected by rising prices of commodities such as wheat and dairy, as well as surging energy prices and the slowing UK economy.

British inflation leapt last month to its highest annual rate since 1982, piling pressure on the government to step up help for households facing a worsening living standard.

The companyalso owns brands like Bisto and Ambrosia, and distributes Nissin's Cup Noodle and Cadbury cakes.

It reported headline trading profit of £148.3m for the year ended April 2, above its forecast of at least £145m.

Separately, a report from consultants McKinsey said on Monday that British consumers are reacting to the crisis by switching from branded to lower-priced and private-label products and from supermarkets to discounters.