KENT St Bakery owner Sarah Fitzgerald is struggling to keep her business open after Woolworths and Coles slashed their bread prices on Friday last week.
Mrs Fitzgerald who had to let an apprentice go after Woolworths reopened near their bakery on Kent St in Maryborough in December last year, has had to let another staff member go after the giant conglomerate reduce the price of bread from $1 to 85c.
Both Woolworths and Coles now sell their home brand white toast and sandwich breads for 85c, they say to help relieve cost of living pressures for customers.
A Woolworths spokesman said the price reduction came after customers said they were struggling to pay for staple items.
A spokeswoman from SupaIGA at Stockland Hervey Bay said their bread prices would remain the same.
"There was dip in our bread sales when the price cut came into effect last week but it has since picked up," she said.
"We believe in serving good-quality bread."
While the price reduction at Coles and Woolworths was welcomed by customers on a budget, local bakeries were hurting.
"I had to increase the price of fresh bread," Mrs Fitzgerald said.
"I let two staff go already because I've got to save money on wages so this price cut will really hurt us even more.
"We slash our old bread price to $2 because our bread is so fresh and lasts longer but people are still opting to go to Woolies."
Mrs Fitzgerald urged people to support local bakeries and buy fresh, local, nutritious bread instead of low-cost bread.
Kelly Murray who owns Kelz Bakehouse sells her loaf of bread for $3.80 but said she wasn't worried about the price reduction as yet.
"There's no way we could make bread for 85c," she said.
"I wouldn't be able to pay wages if I had to compete with the big companies but we're in a different boat.
"We're on the Esplanade and we have our local customers and also tourists who pay for the quality so it hasn't really affected now so we'll wait and see.
"If people want good-tasting bread, they have to pay a little more."
Earlier this week, Woolworths also reduced its large pack of Australian beef mince from $9.99 a kilogram to $5/kg.
Prices of carrots, milk and toilet tissues were also slashed.
Coles also brought their three-star beef mince price down down to $5/kg.
The ACCC, in response to the price war, said businesses were free to set their prices and discount their goods and services as they saw fit.