Before a group of skeptical MPs, the big bosses of the country’s major grocery chains on Wednesday firmly rejected accusations that they are taking advantage of the current inflationary period to rake in record profits while a growing number of Canadians struggle to pay their grocery bill.
Invited to explain before a parliamentary committee the significant increase in food prices in recent months, the CEOs of Métro inc, Éric La Flèche, of Loblaw, Galen G. Weston, and of Empire Company Limited (IGA), Michael Medline , held essentially the same speech.
The rise in food prices is attributable to a host of factors over which they have little control such as the cost of transportation, labor shortages, congestion at ports and the fall in the value of the Canadian dollar. against the US currency, among other things.
And if their companies are posting sharply rising balance sheets, this is largely due to the financial services, clothing and drugstore sales they hold, and not to an increase in profits in grocery stores, in particular reported Galen Weston.
“Food prices have increased 25 times faster than profits. And at Loblaw, none of those profits came from higher margins. Retail prices have not increased faster than our costs. The idea that grocery chains are causing food inflation is not just wrong, it’s impossible no matter how many times you read this on Twitter,” Mr Weston said. .
He has stated on more than one occasion in front of elected officials that the company he runs pockets a dollar in profit on a $25 grocery basket. Even removing that dollar of profit, the basket would still remain at $24, he argued.
He also said Loblaw is doing everything it can to keep food costs down, pointing to a time-limited price freeze earlier this year at discount grocery stores like Maxi and No Frills.
“The high inflation we are experiencing is a global reality. But Canada is doing better than most other G7 countries. There is no doubt that the price of food has increased due to rising costs for suppliers and producers. The pandemic, the war in Ukraine, unfavorable weather conditions and issues related to transportation and labor are among the many factors contributing to the rise in prices,” said Metro CEO Eric The arrow.
According to Statistics Canada, the prices of food purchased in grocery stores have increased by almost 10% in 2022. This is the fastest increase since 1981. The increase in prices has affected all food categories, except exception of canned salmon. In January, the increase reached 11.4% compared to the same month last year, or double the inflation rate for all sectors (5.9%).
The explanations of the big bosses did not seem to convince the elected officials. In turn, they highlighted the record profits that the major grocery chains have reaped in 2022 when many Canadians are struggling to make ends meet.
NDP Leader Jagmeet Singh was particularly incisive in many of his exchanges with the Loblaw CEO. “You are making unprecedented profits while people are struggling. How can you reconcile your record profits of over a million dollars a day with what you say? I have more than 2,000 people who have sent me their questions and who say they are in misery, ”said Mr. Singh in particular. “Your explanations aren’t going to give them much comfort.”
Mr Weston fired back that his company rejected a cost hike equivalent to $500 million last year.
“Reasonable profits are an important part of running a successful business. I think a dollar profit on a $25 cart is a reasonable profit,” he insisted. He also said that the profits are reinvested in the construction of new food markets, among other things, which creates jobs.
At the end of the meeting, the deputies adopted a motion inviting the leaders of Costco and Walmart to appear before the committee.