Bill Schiller shops for groceries at the Family Food Market Co. during his weekly trip to Toronto’s St. Lawrence Market on May 18.Fred Lum/the Globe and Mail
Food prices continue to skyrocket across Canada, driven in large part by higher import and input costs, as well as challenges posed by the pandemic and Russia’s invasion of Ukraine.
On Wednesday Statistics Canada reported a 10.3-per-cent year-over-year increase in the price of food in September. That includes a 7.5-per-cent jump in the cost of restaurant meals and 11.4 per cent for groceries – the biggest surge since 1981.
The news comes despite three consecutive months of decreases in the general inflation rate.
Many of the biggest increases were among imported food items: cereal products, bakery items, condiments and spices. The cost of pasta, for instance, rose 22.5 per cent; coffee and tea, 16.4 per cent.
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Experts attributed these price jumps in large part to logistical challenges, higher transportation costs and, in some cases, the weak Canadian dollar.
“What’s a little worrying is the impact of the Canadian dollar exchange rate against the U.S.,” said Simon Somogyi, a professor of food business at the University of Guelph. “We’re seeing that in the cost of all those imported products.”
He also blamed persistently high input costs.
“In general on farms, we’re still seeing higher prices for fuel, for fertilizer and for labour,” he said. Though some of these costs, such as the price of fuel, have begun to ease recently, he said it may take some time before that’s reflected on grocery shelves.
Typically, the prices of many food products ease around this time of year as Canadian fruits and vegetables reach grocery store shelves. But this year, Prof. Somogyi said, that’s been offset by all the other costs borne by farmers.
No single cause is responsible for food prices, said James Vercammen, a professor of food economics at the University of British Columbia. Given the extremely complicated nature of food manufacturing and processing, he said, there are many elements along the way – from greater overhead costs to higher wages – that can be blamed for pushing prices higher.
“It’s many things that are less obvious,” he said. He pointed to food packaging costs as one example: The price of glass has skyrocketed recently because of the large amount of energy required to manufacture it.
Still, in recent months, grocers and politicians have scrambled to respond to the public outcry over high prices.
Grocery retailers in particular have been accused of price gouging and profiteering. Many of those grocers are the same retailers who were implicated in the bread price-fixing scandal in 2017.
Earlier this week, Loblaw said it would freeze prices on all its No Name brand products until the end of January, a move that many have dismissed as a PR stunt. Metro told reporters this week that it, too, would freeze prices on its house label products until the beginning of February, describing the move as “industry standard.” (A Metro spokesperson declined to comment when The Globe and Mail requested details on the price freeze.)
And in Ottawa, an NDP motion to investigate “greedflation” among grocery chains was passed unanimously by MPs this week. The motion also asks grocery chain CEOs to appear before the standing committee on agriculture to explain their roles in inflation.
Still, experts say there is little evidence to suggest price gouging.
A report from the Agri-Food Analytics Lab at Dalhousie University this year investigated this very issue and found no evidence of abuse. Instead, the report said gross margins at three major grocery companies – Loblaws, Metro and Empire/Sobeys – have remained relatively consistent over the past three years.
“It’s not because of malevolence. It’s not because of greed. It’s not because of profiteering,” said Ian Lee, a professor of management at Carleton University.
He pointed to recent financial data from Loblaws, for instance. The company reported a net profit margin of 3.04 per cent in the second quarter of this year – up only slightly from 3.03 per cent last year.
“If Parliament wants to get upset,” said Prof. Lee, they should instead focus on the main drivers of inflation.
“I would put energy at the very top of that list,” he said. “And secondly, the supply chain.”
Prof. Vercammen, meanwhile, says politicking around food prices is just that – politics.
“It’s pretty much free markets that determine prices,” he said. “Realistically, I don’t think much can be done.”
Ann Hui