Decoding Canada’s food inflation maze

Sylvan Charlebois, Troy Media

Sylvain Charlebois, Troy Media

July’s food price data tells us a lot about why our grocery bills are the way they are.

Some Canadians might not acknowledge it, but things are getting a bit better. Our food prices increased a bit less this month, going from 8.3 percent to 7.8 percent. To make it simpler, even though food is still expensive, the prices aren’t going up as fast.

Because of this, we might soon see some essential unprocessed food items like sugar, flour, and coffee get a bit cheaper. However, the latest figures from Statistics Canada reveal a nuanced depiction of the myriad elements influencing the costs of our food. For example, bad weather like droughts and too much rain, especially in the east, made some food more expensive this summer. However, big problems from the past, like the pandemic and issues in Ukraine, don’t really affect prices anymore.

The current monthly report shows how different food prices have changed. Meat got a bit more expensive, increasing by 1.3 percent from June to July. This could be attributed to a combination of factors affecting beef prices, shifts in consumer preferences, disruptions in livestock production in Canada and the United States, and fluctuations in international trade dynamics. Veggie prices also went up by 1.2 percent, which may indicate local and global supply uncertainties, exacerbated by potential weather-related disruptions impacting harvests in certain regions.

Notably, bakery and dairy products have seen slight increases of 0.8 percent and 0.6 percent respectively. These subtle increments reflect the intricate processes of production, transportation, and the numerous factors converging to deliver these staples to our tables. Meanwhile, the one percent decline in fish prices may highlight evolving consumer behaviours or shifts in the availability of imports.

Fruit got a lot cheaper, going down by 3.4 percent. While this reduction could be welcome news for consumers, it also underscores the vulnerabilities that can disrupt getting fruit from farms to stores, especially in summer. Transportation bottlenecks, trade imbalances, and shifts in global demand are all contributing factors to such fluctuations.

Even in the broader context of the G7 nations, Canada’s food inflation data presents a unique narrative. Despite the fluctuations, Canada maintains the second lowest food inflation rate within the G7, underscoring a level of economic resilience in the face of global challenges. Only the United States currently boasts a lower food inflation rate, at 4.9 percent.

Quebec and Ontario, the country’s most populous provinces, demonstrate varying rates of food inflation. Quebec, with the highest rate among the provinces at 9.4 percent, reflects distinctive regional dynamics. In contrast, Ontario’s rate of 7.2 percent highlights a potentially different balance of supply and demand factors. While Ontario’s weather has been favourable for harvests, Quebec has experienced excessive rainfall that has damaged a significant portion of crops.

The discussion surrounding the carbon tax is also noteworthy. Amidst this intricate landscape, the impact of clean fuel and carbon taxes on food prices warrants consideration. While these policies aim to promote environmental sustainability, their direct influence on July’s food inflation remains uncertain. The complex interplay of market dynamics and government interventions makes it difficult to pinpoint the exact effect of these measures.

In the broader context, the increasing cost of lodging is becoming a significant concern for many Canadians. Rising shelter expenses are likely to place additional strain on Canadian households’ food budgets. The latest quarterly results from grocers reveal a growing preference for store brands and discount stores within a more cost-conscious consumer market, a trend likely to persist into the upcoming fall season.

In the end, July’s food price data isn’t just about numbers. It shows how strong Canada’s farming is compared to other places, even if we don’t always see it. After dealing with high food prices for 18 months, it’s clear that our food system can handle tough times. This should remind us all to work together to make sure everyone in Canada can get good, affordable food.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.