It’s not your imagination: Food is getting more expensive. Grocery prices have jumped 5.7 per cent over the past year, the sharpest increase in a decade. Bacon prices are up 19 per cent. Condiments have risen 10 per cent. And fresh fruit is up 5.6 per cent.
It’s not generally the sort of thing that gets the Bank of Canada’s attention. After all, higher interest rates can’t alleviate a cold snap in Florida that’s ruined produce. But on Wednesday, the central bank dedicated a chunk of its quarterly Monetary Policy Report to the issue – and the outlook isn’t all that encouraging.
“These increases in food prices will likely continue,” the bank said, adding those increases should remain above the historical average for the rest of the year. (From 2010 to 2019, the average 12-month increase in grocery prices was 2 per cent.)
A perfect storm of factors are driving up prices: the worst summer drought in Western Canada in decades; higher energy and fertilizer costs for production; and steeper labour costs amid a shortage of workers.
The latest headwind is tighter border controls on unvaccinated truck drivers, which went into effect earlier this month. “We saw an uptick in the transportation costs right away,” Eric La Flèche, the chief executive officer of Montreal-based grocery chain Metro Inc., told analysts on Tuesday. The impact is acute for imports of U.S. produce.
There is, however, a silver lining: Metro is managing to stock its shelves. “For the most part, we’re getting the merchandise,” Mr. La Flèche said, “but there’s an inflationary issue that comes with that requirement.”
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