Pace of food inflation slows: Statscan

U.S. drought could spur prices in months ahead, expert warns

No matter how you slice it, food costs are taking a smaller chunk out of Canadian incomes.

While food prices were up 2.4 per cent for all of 2012, that was still weaker than the 3.7 per cent gain the previous year, according to Statistics Canada’s annual review of consumer spending.

Much of that slower price rise can be attributed to a drop in fresh vegetable costs, the federal agency said Friday, while there were still record gains in meat prices and restaurant bills.

But it wasn’t only food costs that rose at a slower pace last year, the increase in gasoline prices also dropped — to a relatively meagre 2.5 per cent from a whopping gain of 20 per cent in 2011. In May 2011 alone, gas prices jumped 29.5 per cent as the cost of crude was peaking.

Overall, Canada’s inflation rate came in at a tame annual pace of 1.5 per cent in 2012, down from a 2.9per-cent increase a year earlier.

That is the lowest annual gain since 2009 — near the end of the recession — when prices rose 0.3 per cent.

Statistics Canada’s review of annual prices — based on average monthly values over the year — was accompanied Friday by the agency’s reading for the final month of 2012.

December’s overall price gains were unchanged from the previous month, at a three-year low of 0.8 per cent. The previous low was 0.1 per cent in October 2009.

Increases in food prices were also weaker on a monthly basis, easing to 1.5 per cent in December from 1.7 per cent the month before.

Consumers paid 2.2 per cent more last month for food purchased at restaurants, and 4.4 per cent for meat at grocery outlets. Still, prices for fresh vegetables in December fell 5.8 per cent.

“Still, people are very cautious in their spending,” said Garth Whyte, president and CEO of the Canadian Restaurant and Foodservice Association.

“Maybe more people are coming out to restaurants, because they like the event and it’s the No. 1 place to go with their family and friends, but they’re skipping maybe appetizers and desserts.”

Despite the general easing in food inflation, there are still concerns that last year’s drought in the U.S., may soon translate into higher prices in this country.