The baker killer is Wallace's new girl friend, Piella Bakewell, a former pin-up girl for the "Bake-O-Lite" bread company. She has a paranoid delusion that bakers and their products are responsible for ruining her figure.
Gromit figures it out and saves Wallace from a cake bomb. Piella attempts to escape in a hot air balloon but because she is overweight crashes into the crocodile pit at the zoo.
Thanks Don P!