Food inflation: end in sight, according to an expert
As rising food costs continue to outpace the overall rate of inflation, a Canadian expert says the industry may have already peaked.
Statistics Canada reported Wednesday that the country’s annual inflation rate rose to 8.1% in June, making it the biggest annual change since January 1983.
Canadians also continued to see higher prices at groceries, with the cost of food rising 8.8% from June last year, although that rate was unchanged from May.
Both, however, are still higher than June’s consumer inflation rate.
« That’s definitely why people are still noticing higher prices at the grocery store and at restaurants, » Sylvain Charlebois, professor and senior director of the University’s Agrifood Analysis Laboratory, told CTV News Channel on Wednesday. Dalhousie.
« But the good news is that I believe our food inflation rate has peaked in our country, so we’re finally starting to see the end of the food inflation tunnel. »
The price of gasoline, which rose more than 50% in June compared to a year ago, is largely responsible for the latest increase in inflation, according to StatCan.
Excluding petrol, inflation rose to 6.5% in June, from 6.3% in May.
The latest figures come after Canada saw a 7.7% increase in year-on-year inflation in May, up nearly a full percentage point from April.
Charlebois said inflation was rising faster in some areas. StatCan figures show that some products have seen larger increases in their average retail price than others.
« But generally speaking, I think the food industry is also starting to control things related to the supply chain and the impact of the Ukrainian conflict, » he said.
Citing data analytics firm NielsenIQ, Charlebois said Canadians also appear to be buying more food from dollar stores, with food sales up 18% since March. He called this consumer trend “down trade.”
In a separate statement provided to CTVNews.ca, Charlebois said Canada’s agricultural sector is also expected to experience a strong harvest this year, which will help keep commodity prices low.
But overall, he said he doesn’t expect year-over-year prices to drop any time soon.
Recently, the Canadian Dairy Commission approved a second milk price increase of 2.5%, or two cents per litre, for the year, which is expected to take effect September 1.
This follows an increase of 8.4%, or 6 cents per litre, in February.
Producers cited increased production costs as the reason for this increase.
But the Canadian Taxpayers Federation slammed the commission for giving pay rises and bonuses during the COVID-19 pandemic while raising milk prices.
« There’s nothing wrong with bonuses, but the lack of transparency is simply unacceptable, » Charlebois said in the emailed statement.
“Taxpayers and consumers deserve better. Our quota system was designed to insulate our dairy sector from inflationary cycles. Something isn’t working.
Meanwhile, the Bank of Canada raised its overnight interest rate to 2.5% on July 13 in an attempt to moderate inflation, following a series of hikes earlier this year.
Charlebois said before the interest rate hike, the market was « flooded with cash, » which helped push up prices, including at groceries.
Now, with interest rates rising, some prices should expect to weaken or fall, he said, while imports will become cheaper due to a stronger loonie.
However, he said further interest rate hikes by the US Federal Reserve could add pressure on the Canadian dollar.
As for what lies ahead, a 2022 food price report released by Dalhousie University, along with the University of Guelph, University of Saskatchewan and University of British Columbia, forecasts that the Food inflation will rise to 7% by the end of the year.
With files from CTV News and The Canadian Press