THE bakery chain Brumby's has apologised unreservedly after it attracted the ire of the government and the competition watchdog for advising its outlets to hike their prices and blame the carbon tax.

Late yesterday, Brumby's parent company, Retail Food Group Limited, issued a statement to ASX saying such advice should never have been issued and that it was not representative of the company's policies or practices.

Brumby's has apologised for advising its outlets to hike their prices and blame the carbon tax. Credit:Ken Irwin

''We therefore express our genuine regret over this isolated incident and unreservedly apologise for this unacceptable error of judgment,'' it said.

The government labelled the behaviour ''reprehensible'' and the Australian Competition and Consumer Commission launched an investigation when Brumby's managing director Deane Priest advised franchisees to price gouge via the company internal publication Backmix. ''We are doing an RRP [recommended retail price] review at present which is projected to be in line with CPI [consumer price index], but take the opportunity to make some moves in June and July,'' he said. ''Let the carbon tax take the blame, after all, your costs will be going up due to it.''

Opposition Leader Tony Abbott did not approve of the tactic but argued it was understandable.