Trade war to boost food prices: Loblaw

Canadians will likely have to pay more for certain food items soon as grocers grapple with the impact of new tariffs in an ongoing trade war and other pressures, said Loblaw Companies Ltd. CEO.

“We see a very strong possibility of an accelerating retail price inflation in the market,” said Galen G. Weston during a conference call with analysts Wednesday.

The company pointed to new tariffs imposed by the Canadian federal government as of July 1 on $16.6 billion of U.S. imports. The targets include a number of food products, such as yogurt, coffee, soya sauce and mayonnaise.

It’s unclear what the financial impact of these tariffs will be, the company said, and the outcome will depend on how both suppliers and Canadians respond.

Higher transportation costs and a low loonie add further pressure on the grocery and pharmacy retailer, which indicated it expects to see upward pressure in prices.

“We don’t think it’s going to be meaningful, you know, super significant,” Weston said, “but it certainly will be higher than what it is today.”

The comments came after the company released its second-quarter financial results.

The grocer’s adjusted earnings outpaced analyst estimates, but it also recorded an 86.1 per cent decline in net profit due to a number of unfavourable items including an acquisition expense at its Choice Properties division.

Net profit available to common shareholders dropped to $50 million or 13 cents per share for the 12 weeks ended June 16, from $359 million or 90 cents per share a year earlier, the company said.