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Why Canadians are still feeling the squeeze of high food costs, and what to do about it.
Statistics Canada reports that inflation keeps going down. Is that what you’re experiencing? Fifteen dollars for grapes? Twenty dollars for chicken breasts? If you’re still struggling with sticker shock every time you set foot in the grocery store, you’re not alone—the #supermarketscaries are real.
There’s the uncertainty around how much you’re going to have to fork over for your grocery cart, but for many families, there’s also a very real struggle to cover the cost of the basics at the checkout counter. According to a new Angus Reid Institute survey, 51% of Canadians say it’s a challenge to keep up with their household food needs. And there is no price discrimination, as that goes for low-income households as well as Canadian families with incomes over $200,000.
“While inflation might be moderating, the accumulated effects of past inflation means that many goods remain expensive,” says Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University in Halifax, N.S. Which is why people of all ages, and families of all sizes, from coast to coast are feeling the pinch, including Anna Lee Boschetto, a mom of two in Caledon, Ont. “I consider myself very fortunate that despite high food prices, we never go hungry,” she says. “But it’s not lost on me that there are a number of families in my neighbourhood, across the GTA and beyond who are not as lucky. It’s alarming because there doesn’t seem to be a tangible resolution to this crisis.”
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The inflation rate in Canada saw decreases this fall—it’s now at 2.0% for October. So, why are we all still feeling the pinch at the coffee shop, market, grocery store and even when we order in? High inflation has meant higher operating costs for farmers and producers, supply-chain disruptions and shifts in corporate profits, which have all led to high food prices.
And, while the price growth for food is finally beginning to moderate, coming in at 2.7% year-over-year in October (up from 2.4% in September), according to the most recent Consumer Price Index report, that still leaves food inflation higher than headline inflation.
The average family of four is expected to spend $16,297.20 on food this year—that’s as much as $701.79 more than in 2023, according to the latest edition of Canada’s Food Price Report, published by Dalhousie University, the University of Guelph, the University of Saskatchewan and the University of British Columbia.
And that’s on top of the whopping increase of $1,065 the year before. “Families are feeling the pressure,” says Charlebois. So, no, you’re not imagining that inflation isn’t gone. We’re still dealing with it.
When and how much food prices will fall is a complicated question—without an easy answer. This is partly due to the fact that it’s not just about inflation.
“Global supply issues, ongoing global unrest and unpredictable weather all have also had an impact on food prices,” says Mike von Massow, a food economist at the University of Guelph.
Some of these factors have impacted overall food costs, but some can also be tied directly to specific goods. For example, the conflict in Ukraine drove up the price of grains to near record levels, which made everything from breakfast cereals to crackers wildly more expensive.
A series of extreme weather events in the Mediterranean have decimated olive orchards, causing the cost of olive oil to more than double over the past three years.
Meanwhile, Canadian beef prices have gone up due to the effects of droughts in the west, which have resulted in smaller-than-usual herds.
The prices of those foods have started to level out, says von Massow, but our food prices traditionally trend up in the fall, as Canadian production of many fruits and vegetables goes offline and we import more product from the U.S. and other countries.
And, of course, it’s not just the produce, dairy and meat aisles where we’ve felt the pinch. Packaged foods have become very pricey, too. And, in some cases, also much smaller.
Over the past few years, some food manufacturing companies have responded to the lagging economy by reducing the size of packaged products to increase their profits. According to reporting by the CBC, bags of Doritos that used to be 80 grams are now 72 grams, Dawn Platinum dish soap now comes in a 10% smaller bottle, and bags of Redpath sugar have shrunk by a whopping 25%.
“Shrinkflation works by hiding price increases in smaller amounts per purchase,” says von Massow. This means you may not be paying more on your bill (or noticing the increase), but it will cost you overall because you’re not getting as much product (meaning you’ll end up buying it more often).
“I’ve noticed this with the size of bread products, like hamburger buns,” says Boschetto. “What’s even worse is that companies are substituting ingredients to cut costs, too.”
This is sometimes referred to as “skimpflation,” and it has been noted in a range of products, including a popular brand of “chocolatey chip” granola bars—formerly labelled as “chocolate chip,” but which now contain palm oil instead of cocoa butter. (In Canada, you can’t call a product “chocolate” if it doesn’t contain cocoa. Read Why is chocolate getting so expensive?.)
And shrinkflation hasn’t just hit foods, either…
So, who’s still seeing #shrinkflation in action?
— MoneySense (@MoneySense) October 1, 2024
Where do you notice it? And has it changed your shopping habits?
(Photo courtesy of managing editor @jaclynlaw.) pic.twitter.com/HbGU1ziUU0
Ultimately, these changes are prompting Canadian families like Boschetto’s to rethink their shopping habits and reprioritize their purchases.
There’s been lots of chatter about the Canadian dollar lately. That’s because it fell to a four-year low last week; the loonie is currently worth USD$0.71, reports the Canadian Press. What does that have to do with food? Canada doesn’t have the luxury of having regions with summer temperatures all year long. So that means we could end up paying more for foods we import. “You want the Canadian dollar low enough that it’s an attractive place for firms to invest and hire at a competitive wage, but you don’t want it so low that you start importing inflation,” Katherine Judge, director and senior economist with CIBC Capital Markets, told CP.
Another piece of this inflation puzzle is how a household’s mix of goods and services will affect how much they feel the pinch. For example, you might bemoan grocery prices but may not have noticed that overall clothing prices have gone down, and so has the cost of electronics. Plus, if you have recently needed to replace a 10-year-old dishwasher, for example, the new one you bought probably didn’t cost much more than your last one. The newer model may be more water- and energy-efficient, too, which should save you money in the long run.
A factor that will help to balance things out for many families, in time, is an increase in wages. “Over the last several months, wage increases have exceeded inflation,” says von Massow.
How much this helps will depend on what type of work you do and your household income, but overall, many Canadians will start to feel some relief, he says. (Haven’t seen the increase in your paycheque? Here are some great tips for how to ask for a raise.)
“For families feeling the pinch, there are strategies to make the most of your grocery budget,” says Charlebois.
Food experts say you can maximize your next supermarket haul by:
“I’m also a fan of shopping the racks of [discounted] produce, bakery and prepared foods,” says Boschetto. “Picking up overripe avocados, for example, can be helpful if you’re ready to make guacamole—[they cost] a fraction of the price.”
Ultimately, we’re going to have to be flexible and manage our purchases to see our bills go down, rather than expect the basket we always buy to get significantly cheaper, says von Massow. “The good news is that prices aren’t going up as much—the bad news is that they aren’t coming down yet, either.”
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Sadly, the prices, once they are raised are likely to stay there and continue to edge up, perhaps more slowly when things stabilize. Stating the obvious, companies are not charities and are driven by profits, especially when publicly traded. Add the costs to produce and get product to market (hello Carbon Tax), and you get end customer price increases.
The only hope might be if consumers change their purchasing habits, forcing the suppliers to lower prices somehow.
And the lowering of interest rates, while nice for those borrowing money, can have the unfortunate effect of lowering our dollar, which in turn, raises the cost of imports (foods, etc.) as pointed out in the article.
What this article is missing is that with two percent inflation, prices are still 2% higher than they were before. After inflation of 20 – 30 percent over the last couple of years, prices are now only 2 percent higher than 30 percent, now 32 percent. All it means that inflation is slower, but still going higher.
“Why your grocery bills are still so high”
“So, no, you’re not imagining that inflation isn’t gone. We’re still dealing with it. ”
What many people seem to not understand is that even when inflation decreases, it is still inflation. Inflation goes from 5% down to 2%, that is good but prices are still increasing just at a slower pace.
For prices to come down, we need deflation. But deflation usually leads to higher unemployment and recession.
In other words, don’t expect the prices to come down.
The only people who see wage increases greater than inflation are federal employees. Canada is so bloated with bureaucracy it looks like wages go up faster, but it’s mostly just government bloat we keep getting taxed more to pay for.