Who's to blame for grocery prices?
Food inflation is a global issue with several factors creating the perfect storm
Why has your grocery bill increased – and who is really to blame?
Food inflation remains frustratingly high, and consumers are finding it difficult to understand why, especially as commentators, politicians and media headlines seek attention by finger-pointing. But the fact is that there is no single reason and no one enemy to blame.
Food inflation is a global issue right now, and several factors have collided simultaneously to create the perfect storm.
As consumers, every time we step into the grocery store, we feel the effects of inflation. With the cost of living – including rent, gas, and heat – up over the past year, it’s easy to be frustrated that the cost of food has outpaced all those. And as a society, we’ve been relatively fortunate for many years. In fact, the last time we saw inflation this high was 40 years ago.
So, what is happening? In the
1980s, the oil crisis helped push inflation into the double digits. This time, as I mentioned, a confluence of factors is hiking the price of almost everything, but in particular food.
MANY FACTORS
The COVID-19 pandemic exacerbated an existing labour shortage that was years in the making. This shortage is affecting salaries and production capacities across the food system and causing supply chain bottlenecks.
The cost of animal feed, fertilizer, fuel for farm equipment and transportation have all increased over the past year.
The war in Ukraine is piling on pressure. Ukraine is one of the biggest agricultural producers in the world, producing grain, sunflower oil and fertilizer.
Climate change has impacted the growth and productivity of palm oil in Indonesia and Malaysia. Canada and the U.S. have both experienced drought and floods that have impacted our harvests, as well. The result is higher prices for cooking oils and staples like bread, cereals and pasta.
Poultry farmers have had to contend with avian influenza, with some farms culling entire flocks. The outcome for consumers is higher store prices for poultry products.
Together, these issues have made almost all staples more expensive, without a single place to point fingers. And yet it would seem we, as Canadians, and our politicians are eager to find someone, anyone to blame.
FOOD SUPPLY
It’s understandable to be angry: food prices are overwhelming many individuals and families and creating greater food insecurity.
But compared to much of the world, Canada still has a secure supply of nutritious food that is reasonably affordable. On average, Canadians spent 11 per cent of their disposable income on food last year, the second lowest rate in the world after the U.S.
Because incomes are considerably higher in Canada than in the rest of the world, the portion of income we allocate to food is still relatively small.
Rather than hunting for people to blame we should be taking this energy and taking a serious look at our food supply chain and how we can make it more resilient.
Everyone is talking about food. Inform yourself using reliable sources of information on how Canadians can continue to have the best food system in the world and the policies that keep prices down and drive prosperity.