Some food items are set to start costing more in grocery stores across Canada again, as a holiday-spanning price freeze ends these days.
Last fall, Loblaw Companies announced it would freeze prices on all of its No Name branded products until January 31, while Metro said it would hold prices on most of its private label products. and national brand until February 5.
The end of this price freeze comes amid growing consumer outrage over soaring grocery prices in Canada and growing scrutiny of grocers’ strong quarterly profits.
But grocery chains argue that their margins have remained stable and are only passing on higher prices from suppliers.
“Food inflation has continued and the cost of stocking our shelves has increased month after month,” Loblaw spokeswoman Catherine Thomas said in an email.
The company, which operates several brands including Provigo and Maxi in Quebec, “will continue to maintain many fixed prices,” and using the No Name brand will save the average family thousands of dollars this year, argued Mme Thomas.
The Metro boss recently reported that the Montreal-based grocery chain received more than 27,000 price increases from its suppliers in 2022, averaging more than 10% just for dry goods, or three times the usual annual rate.
“We cannot predict future inflation, as many requests for price increases from suppliers continue to come in and the root causes, beyond our control, are still present,” said the CEO of Metro, Eric La Flèche, during a conference call with analysts.
An extension of the freeze abroad
Still, at least one grocer in another country has chosen to extend a moratorium on price increases.
In Australia, supermarket giant Coles has extended its price freeze on certain products, which was due to end on January 31.
“They said it was to help Australians get through this food price inflation,” said Michael von Massow, professor of food economics at the University of Guelph in Ontario.
“They went for basic items, kind of like the No Name (brand) price freeze, but maybe they went a bit further and extended it. »
It’s unclear how much food prices in Canada may rise in the coming months as inflation continues.
Factors such as the war in Ukraine, flooding in California and the strength of the Canadian dollar could all play a role, von Massow observed.
There are many unpredictable factors, but there is room for optimism
Michael von Massow, professor of food economics at the University of Guelph in Ontario
While prices for goods sold in grocery stores rose 11% year over year in December, von Massow pointed out that the month-over-month increase was only 0 .3%, or about 3.5% on an annualized basis.
“It’s still high, but there are early signs of relief,” he said.
Also, as spring approaches and Canada’s reliance on imported fruits and vegetables decreases, costs in the fresh produce aisle are expected to decline, von Massow continued.
As for the growing consumer backlash against grocers, he’s not surprised — even if their frustration is misdirected.
“Grocers are making record profits and yet some people are struggling to eat. […] I can understand people’s anger,” he said.
The increase in grocers’ profits is due to a host of factors, including Canadians cooking more at home to save money and increased sales of non-food items, which offer higher margins, a he explained.
“Everyone is looking for a simple answer to this problem and unfortunately there isn’t one,” said von Massow. Could grocery stores manage these perceptions better? Yes. Are these perceptions correct? Probably not. »