Business

Rising grocery prices continue to far outpace overall inflation

Published

1 year ago

August 16, 2023

Grocery prices are still rising at a far higher annual pace than overall inflation, but experts expect to see them continue moderating as the year progresses.

The price of groceries grew 8.5 per cent in July compared with last year, down from a 9.1 per cent year-over-year gain in June, according to Statistics Canada. The slower growth was mainly thanks to easing prices in the fresh fruit and bakery products categories, the agency said.

Eight and a half per cent is still a far cry from the headline inflation reading of 3.3 per cent in July, which has significantly fallen from a high of more than eight per cent last year.

But looking at the year-over-year increase in food prices doesn’t tell the whole story, said Michael von Massow, a food economy professor at the University of Guelph in Ontario.

Some of the biggest monthly increases in food prices happened last fall, meaning the annual rate of food inflation is skewed by those, he said. On a month-over-month basis, grocery prices actually rose slower than overall inflation in July.

However, there’s no question that food prices are still rising, albeit slower, he said, and that consumers are feeling the pinch.

“We can’t defer food purchases,” he said. “We can change our behaviour with driving if we want, we can defer the purchase of a new computer … but we can’t defer food.”

As the months wear on, the annual rate of food inflation is likely going to keep trending lower since it will increasingly factor out last fall’s oversized increases, von Massow explained.

The Bank of Canada’s interest rate hikes don’t have a direct effect on food inflation but can indirectly pressure consumers to spend less at restaurants or grocery stores, said von Massow — but only to a certain extent.

There’s some reason for optimism in the coming months, as seasonal harvests in Canada could help ease the cost of some fruits and vegetables, said von Massow. But food prices are also much more vulnerable to the effects of extreme weather, and could also be impacted by the war in Ukraine as Russia exited its grain export deal, he said.

“The one thing we can be sure of is there’s going to be more volatility.”

Food price inflation is expected to continue easing in the coming months as lower commodity prices and easing supply chain pressures pass through to retail products, said RBC economist Claire Fan. Overall food price inflation is expected to fall closer to five per cent by the end of the year, she said.

While prices are still much higher than they were a year ago, consumers can at least look forward to fewer surprises at the grocery store, Fan said.

However, over the longer term, extreme weather around the world will add more pressure to food prices, she said.

Some forecasters are saying the latest inflation report has raised the odds of an interest rate hike next month from the Bank of Canada.

A hike isn’t entirely out of the question, but there’s more economic data to come before the central bank makes its decision, Marwa Abdou, senior research director at the Canadian Chamber of Commerce, said in a statement.

“So much of the downward momentum and cooling that we’ve seen over the past few months has been overstated progress from soaring gas prices a year ago,” Abdou said.

“While those effects have now peaked, and heftier grocery bills, mortgage interest rate costs and energy prices remaining a pain point for Canadian consumers, we’re now getting a chance to focus on the real work that remains ahead.”

Meanwhile, Fan says the central bank is likely to hold rates at its next meeting in September, opting to wait for more economic data as the economy shows signs of weakening in key areas like the labour market.

“From this point forward, the bar to keep moving interest rates higher is quite high,” she said.

This report by The Canadian Press was first published Aug. 15, 2023.

Rosa Saba, The Canadian Press

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Business

Roots sees room for expansion in activewear, reports $5.2M Q2 loss and sales drop

Published

19 hours ago

September 13, 2024

Anne Joseph

TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.

The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.

“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.

The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.

But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.

Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.

“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.

“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”

Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.

The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.

In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.

Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.

The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.

The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.

Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.

Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.

It will also re-evaluate its design ranks.

Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.

Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:ROOT)

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Business

Talks on today over HandyDART strike affecting vulnerable people in Metro Vancouver

Published

2 days ago

September 12, 2024

Anne Joseph

VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.

No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.

About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.

Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.

Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.

A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”

This report by The Canadian Press was first published Sept. 12, 2024.

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Business

Transat AT reports $39.9M Q3 loss compared with $57.3M profit a year earlier

Published

2 days ago

September 12, 2024

Anne Joseph

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.

Companies in this story: (TSX:TRZ)

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