The agency said food prices were up 10.4 per cent year-over-year in January — up slightly from December — while the rest of the Consumer Price Index (CPI) items decelerated to an annual pace of 5.9 per cent.
Food inflation has outpaced the general inflation rate for 13 months in a row. And while StatCan’s CPI tracks a representative basket of goods to show general trends in Canada, Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, says consumers might find their personal inflation rate is even higher if their diets are made up of the fresh foods and grains that are being hit particularly hard.
“I suspect a lot of people are saying, ‘Well, 10.4 per cent is unbelievable. Well, they’re right. Actually, it’s probably more than that,’” he says.
January’s grocery store prices were higher for meat (up 7.3 per cent), bakery products (up 15.5 per cent), dairy (up 12.4 per cent) and fresh vegetables (up 14.7 per cent).
There were some aisles of relief, however: lettuce, specifically, saw a 5.8 per cent price drop last month, as did oranges (down 1.8 per cent), pasta (down 0.5 per cent) and breakfast cereals (down 2.9 per cent). Fish — be it canned, fresh or frozen — also saw some modest price drops.
Why is food inflation still so high?
Statistics Canada pointed to a few global factors driving up food prices. When it comes to chicken, which saw costs rise 9.0 per cent year-over-year in January, the agency pointed to avian flu outbreaks, strong seasonal demand and continued supply chain issues as fuelling the price hikes.
Charlebois says nearly a year after the war in Ukraine began, the conflict is still stymying access to grains and other inputs from the region. Lingering supply chain constraints are making it more expensive to source and ship ingredients, driving up costs for producers, processors and retailers alike, he says.
“All of these things are just creating more sticker shock moments at the grocery store.”
But with production disruptions easing, Royal Bank of Canada Economist Nathan Janzen said food inflation should start to slow. He said the bank’s latest forecast shows it dipping below three per cent by the end of 2023.
“We are expecting growth in those prices to plateau and … and we are starting to see some signs of that,” he told The Canadian Press.
“Year-over-year price growth in grocery prices is still extremely high, but it’s been kind of flattish since last fall. What we’re seeing is probably still, at least in part, the impact of those earlier global supply chain disruptions, transportation disruptions, as well as spikes in agricultural commodity prices earlier last year and those shocks have unwound to an extent.”
Janzen cautioned that Canadians shouldn’t expect to pay less for their groceries in the near future.
“It’s easier for prices to go up than down,” he said. “We’re not expecting prices to decline, just to grow at a slower rate.”
Charlebois agrees that Canadians hoping for a break this month or next might be disappointed. A Feb. 1 hike to farm gate prices on dairy in Canada means these costs will likely continue to rise in future CPI reports, for example.
Canadians are in for a “rough winter,” Charlebois says, though he anticipates food inflation will return to more typical levels in the spring and summer months.
Calls grow for more grocer competition, transparency
A House of Commons committee studying inflation last week summoned the CEOs of Canada’s big three grocers — Empire Co. Ltd., Metro Inc. and Loblaw Co. Ltd. — to answer questions on the causes of food inflation.
Executives from all three companies have testified at past committee meetings focused on the rising cost of food — but not their CEOs.
“Those at the heads of these companies, where the buck stops, should at least have to answer questions around why their profits are so high and why their prices are so high,” NDP Leader Jagmeet Singh said last week. “And why are they profiting off the backs of Canadians?”
In response to online criticism from consumers, Loblaw acknowledged recently that it has become the “face of food inflation,” but also claimed it makes less than $4 of profit on every $100 grocery bill.
If these CEOs do appear, Charlebois says the committee ought to focus its questioning on breaking down sales in their stores more clearly than they do in their financial statements. Currently, it’s difficult to break out whether revenue growth comes from food sales or cosmetics, clothing and pharmacy divisions, he notes.
“The information that we get is very sketchy and unclear,” Charlebois says. “I would actually try to dig as deep as possible into the data with CEOs in the room, or else it’s just a waste of time.”
Regardless of the CEOs’ answers on the causes of food inflation, Charlebois says Canadian consumers would benefit from more competition in the form of discount grocers such as Aldi and Lidl elsewhere in the world.
While Canadian grocers’ profit margins have stayed largely consistent through the current inflationary period, those margins are roughly double what’s reported from their U.S. grocery counterparts, Charlebois notes.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
