‘No relief in sight’ on food prices
Grocery costs increase despite fall in inflation, StatCan says
Canada’s annual rate of inflation fell in January but food prices kept on soaring, Statistics Canada announced Tuesday.
The Consumer Price Index, a broad-based basket of goods and services used to measure inflation, was 5.9 per cent higher than it was at this time last year. That’s down from the 6.3 per cent inflation seen in December, and lower than the 6.1 per cent most economists surveyed by Bloomberg had expected.
But grocery prices continue to surge far past the “headline” inflation rate, rising by 11.4 per cent. Meat prices rose by 7.4 per cent, their highest increase since 2004, while baked goods (15.5 per cent), dairy products (12.4 per cent) and fresh vegetables (14.7 per cent) saw double-digit increases. Restaurant food also rose, by 8.2 per cent.
Anti-poverty activists and economists say there’s no doubt Canadian households are feeling the bite from higher food prices.
People in lower-income households are having to choose between food, rent and medicine, said Leila Sarangi, national director of Campaign 2000, a coalition of groups working to end child and family poverty.
“It’s absolutely heartbreaking,” Sarangi said. “People call me and are just desperate, because they don’t know what to do. Some of them are suicidal.”
Sarangi, who notes that at least 1.4 million children in Canada live in food-insecure households, said there’s a lasting impact from child poverty and hunger.
“Child poverty and child hunger have permanent effects on the people who experience them,” Sarangi said. “There are worse health outcomes, worse educational outcomes. Governments know this.”
Even though the headline number is down, food inflation is something every single household will notice, said David Macdonald, senior economist at the Canadian Centre for Policy Alternatives.
“It’s something that everyone feels, and there’s just no relief in sight,” said Macdonald.
While some of the increase in food prices has boosted bottom lines at grocery stores, Macdonald said some food producers have also benefited.
“There are things going on all through the supply chain,” Macdonald said.
While the surge in grain, food oil and fertilizer prices prompted by Russia’s invasion of Ukraine last January has come back down a bit, the original bump is still being felt on grocery store shelves, said Pedro Antunes, chief economist at the Conference Board of Canada.
“We’re still seeing some of those big commodity price increases working their way through the system,” said Antunes.
While some prices move more quickly, the more processed a commodity gets before hitting the shelf, the longer it takes for the initial price jump to show up at retail, Antunes said.
Grain, for example, needs to be milled into flour, which will eventually get baked into bread. Or it can be used as feed for chicken, pigs or cows, which take months or years to grow.
But food inflation is caused by more factors than commodity price increases working their way through the system, argued Sylvain Charlebois, director of the AgriFood Analytics Lab at Dalhousie University.
“There’s a perfect storm impacting many categories, including vegetables, dairy and bakery,” said Charlebois, pointing to droughts and disease in California, and another milk price increase by the Canadian Dairy Commission.
“We’re not out of the woods yet. February’s always a bumpy month,” said Charlebois.
Although wages rose by 4.5 per cent, it’s still a smaller jump than inflation, Macdonald noted, making the increase in basics like food and rent even more painful.
“Workers are falling even further behind every single month,” Macdonald said.
The Bank of Canada has raised interest rates eight straight times as it attempts to get inflation under control.
Inflation has eased somewhat since last June, when it hit a 39year high of 8.1 per cent. But it’s still well above the Bank of Canada’s target of two per cent per year.
‘‘ It’s absolutely heartbreaking. People call me and are just desperate, because they don’t know what to do. Some of them are suicidal.
LEILA SARANGI NATIONAL DIRECTOR OF CAMPAIGN 2000