Galen Weston worried energy costs could lift food inflation

Loblaw chairman Galen Weston says he is worried food inflation in Canada could climb again as the war in the Middle East raises energy and fertilizer costs, though he does not expect prices to rise as fast as they did after the pandemic.

“We’re worried about it,” Weston said in Toronto on Friday, according to reports of his remarks carried by Bloomberg and summarized by Briefs Finance. “Not worried that it’s going to go back to 11% like it was in 2021, but worried that all these forces out there are going to continue to put pressure on that value chain.”

He pointed to the Strait of Hormuz, fertilizer prices that have “been peaking recently” and El Niño as pressure points. Diesel and fertilizer are costs for food producers that can eventually reach the checkout.

The warning comes as grocery inflation is easing, at least for now. Food inflation slowed to 1.7 per cent year over year in September from 2.8 per cent in August, while overall inflation rose to 3.1 per cent on higher gasoline prices, Loblaw said in its October Food Inflation Report. Statistics Canada figures show grocery prices are up 33 per cent over six years.

The same report said Loblaw has pushed back on hundreds of millions of dollars in proposed supplier cost increases this year, as we reported last week.

Weston, Loblaw’s controlling shareholder, also defended the company against criticism of its role in high food prices. He said he was labelled “the most hated person in Canada” when food inflation surged, and called the vilification a mix of mistaken analysis, politics and “lies,” Briefs Finance reported.

He argued grocers have limited influence over final prices because much of the pricing is set earlier in the supply chain. He said the company keeps about $1 in profit on every $25 shoppers spend, leaving little room to cut prices. Those are his own figures, and they were not independently checked for this story.

A parliamentary committee has previously said post-pandemic food inflation was driven by supply chain pressures and corporate concentration, and recommended more competition among grocers.

Weston also rejected suggestions that Loblaw’s stores use digital pricing to change price tags for individual customers, calling the idea “total nonsense.” He said the company does not use algorithmic pricing and never will.

Canada News Media has not heard Weston’s full remarks and is relying on these published reports. Loblaw has not been asked for further comment for this story.

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Sources: Bloomberg; Briefs Finance; Kamloops BC Now; Loblaw’s October Food Inflation Report.