Canadian food prices are expected to rise between 2.5 and 4.5 per cent in 2024, according to a new report.
“It is probable that Canadians will continue to experience the strain of food inflation compounded by increasing costs of housing, energy and various other expenditures,” according to Canada’s Food Price Report 2024.
The food bill for a family of four is estimated at $16,297.20, an increase of $701.79 compared to 2023.
The report is produced by Dalhousie University, the University of Guelph, the University of British Columbia and the University of Saskatchewan.
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Sylvain Charlebois, project lead, professor, and director of the Agri-Food Analytics Lab at Dalhousie University, said this reflects two major disruptions — the global pandemic and the war in Ukraine — having been largely absorbed by global food markets.
“These ‘black swan’ events have kind of faded away,” Charlebois said.
Grocers are responding to the return of some stability by running promotions and generally engaging in stiffer competition.
“It is much easier for them to plan, and plan promotions,” Charlebois said.
Last year’s report forecast a five to seven per cent increase in food prices in 2023. The current rate for food price increases is 5.9 per cent, according to Consumer Price Index data.
The increase was attributed to enduring COVID-19 supply chain problems, climate change, carbon taxes, the conflict in Ukraine and labour disruptions.
Charlebois expects food inflation to continue to fade throughout 2024. “The sweet spot for food inflation is 1.5 to 2.5 per cent,” he said. “We’re not there yet, but I think we will be there by the end of 2024.”
Still, Canadian consumers have been hard-pressed in recent months when it comes to food prices. There were nearly two million visits to food banks in Canada in 2023, a 32 per cent increase over the previous year.
“This is the highest level of food bank use in Canada on record,” stated the report.
Consumers believe that price gouging by grocery companies is the main reason for escalating food prices, but a Bank of Canada study shows markups were in line with inflation rates.
Charlebois expects to see the political heat surrounding food inflation to fall in lockstep with the slower growth in food prices. He also noted that consumer fury around food prices was largely a reaction to another runaway piece of the Canadian consumer economy — the cost of shelter. As that’s risen rapidly, consumers are frequently forced to make hard decisions in other areas of their domestic economy — such as food choices, as it’s easier to make changes to food purchases than it is to find suitable affordable
“We’ve had a massive trading down in food choices in Canada over the past year — mostly from February to October,” Charlebois said. “That is stabilizing now.”
Charlebois added that the recent Bank of Canada decision to hold pat on interest rates will also contribute to consumer relief both on food prices and shelter costs. He noted that global warming and the desire to decarbonize food supply chains remain inflation risks in the food sector.
Concentration
The report noted that 80 percent of Canada’s grocery market is controlled by five companies: Loblaws (29 per cent market share), Sobeys/Safeway (21 per cent), Costco (11 per cent), Metro (10.8 per cent), and Walmart (7.5 per cent).
“Canada has a concentrated grocery industry and is a tough landscape for new players to break into,” stated the report.
One thing that should help is the “imminent introduction” of a consumer protection code of conduct in Canada’s food sector.
“(It) is a momentous development with promising implications for consumers and the industry,” stated the report.
Australia, the United Kingdom and Ireland have already adopted codes and those countries have shown more modest increases in food prices when adjusted for inflation. However the voluntary code has run into newfound opposition from grocers as it nears the finish line. Loblaws is suggesting it could raise grocery prices by more than $1 billion, and Walmart Canada has said it could add unnecessary burdens to producers.
That’s led to a code of conduct push from two high-profile Canadian political leaders.
Lawrence MacAuley, federal minister of agriculture and agri-food and Andre Lamontagne, Quebec’s minister of agriculture, fisheries and food, have issued a joint statement.
“After years of work, broad consultations, and unprecedented engagement across the grocery supply chain, we’re disappointed to see that the Grocery Sector Code of Conduct has still not been launched and that supply chain partners are hesitant to move forward,” the statement reads.
The Canadian government has also introduced Bill C-56, which proposes amendments to the Competition Act to enhance competition in the grocery sector.
—Gord Gilmour is senior editor, news and national affairs with Glacier Farmmedia. He write from Winnipeg. Additional reporting from Sean Pratt.
