Already knocked-back by the prospect of the ‘pasty tax’, Greggs shares were hit this week after the wettest April for a century hit high street sales.

The high street baker reported a 2% drop in like-for-like sales for the quarter to 12 May - raising fears about profits for the period.

“We expect higher levels of wastage from unsold items and the fixed nature of staff costs to impact profitability,” said analysts at Numis Securities.

The trading update, which was delivered on Wednesday, caused the share price to drop by 4% on the day to 476p and led Oriel Securities to downgrade the shares to ‘sell’.

The outcome of a consultation on the Budget announcement in March - that VAT would be charged on all hot food - will play a big role in determining the future direction of the share price. Greggs chief executive Ken McMeikan has admitted the tax change could have “a material impact on our sales and profits”.

The threat has already depressed the Greggs share price - it fell more than 6% on the day of the Budget. There is some confidence that the result of the consultation will contain some good news for Greggs, however.

“In our opinion, it would be impossible to police a tax on baked goods that cool down once on display, so we expect some positive changes to the original proposals,” said Numis.

On Wednesday, Tesco meat supplier Hilton Food Group also updated the markets, saying that trading so far this year was in line with expectations. However, the share price dipped 1% on the day to 289p as analysts warned the strength of sterling could affect its results.

Panmure trimmed its earnings per share forecast for 2012 by 2.2% to 27.1p, on the basis that all three major currencies it is exposed to (euro, Swedish krona and Polish zloty) have weakened against sterling.

Meanwhile, the brewers Adnams, Shepherd Neame and Thwaites as well as the English wine producer Chapel Down were all caught up in the collapse of junior stock exchange Plus Markets this week.

Adnams said it was considering its options as the stock exchange prepares to close in six months.

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