Canadians Stung by Rising Food Prices

New Survey Shows Nearly 70% of Canadians Feel Inflation Most in Grocery Aisles 

Sticker shock as we browse the aisles. Anxiety as we fill our carts. Canadians told us that by far the spending area they most feel the impact of rising inflation is with food. Over the past year we’ve seen a 5% increase in food prices (including groceries, dining in, and takeout, etc.), but focusing on 1-year alone ignores the cumulative impact we’ve seen on food prices since the pandemic. From May 2020 to December 2023 food prices are up a staggering 21% in Canada. 

A recent poll by LARi Insight confirms that food prices are top of mind for Canadians. Nearly 70% (69.7%) of over 1,200 respondents indicated that “Groceries” are the area where they most feel the impact of inflation. A distant second was utility prices (9.6%), gas and transportation (8.0%), childcare or education (8.0%), entertainment and leisure (3.7%), healthcare costs (2.8%), and clothing and personal items (1.9%). 

Among these categories, gas has actually increased the most if we look back to the start of the pandemic (up 59.1% from May 2020 to December 2023), but recent dips in gas prices may have reduced the immediate pain for Canadian consumers. We’re spending far more at the pump and in our grocery carts than just over three years ago.

Here, based on data from Statistics Canada, are the 1-year changes in inflation across common Canadian spending categories, as well as the change since the early days of the pandemic (May, 2000) to December 2023.

Canadian Food Prices Up 21% Since Pandemic

Let’s dive into a typical shopping cart and explore what those price increases mean in terms of actual food items. The table below shows the increase in price for common food items from October 2022 to October 2023, and from the early days of the pandemic (May, 2000) to October 2023. We simply selected a basket of common items here (no cherry-picking!) to show the wide range of inflation impacts on different grocery items. In a few rare cases, prices are actually cheaper than before, but some – like vegetable oil, have increased a whopping 94.2% since the pandemic started.

Note that this is a static snapshot of inflation values, which will not be updated monthly. For the latest updates on food prices, visit our Canada Food Price Inflation Calculator.

Let’s put this in more practical terms of reference, like the type of meal you might put on your family’s plates for a Saturday lunch. Most everyone loves a good chicken club sandwich, especially with grilled chicken breast, the obligatory bacon, lettuce, tomato, and a good smothering of mayo. Let’s imagine we’re back in May 2000 and you’ve loaded up your shopping cart with all the items for your club sandwiches. The cost of all the ingredients plus any leftover items would have been, on average, $31.10 according to the Monthly Average Retail Prices from Statistics Canada. Comparing that to the most recent data available (Nov., 2023), today that grocery bill would set you back $39.10, a 25.7% increase, meaning each of four sandwiches would cost $9.77, minus the value of any leftover ingredients (we love mayo, but you likely wouldn’t use the full jar on four sandwiches).

What’s Causing Food Price Inflation in Canada?

The problem would certainly be simpler if we had one convenient cause to blame. There are plenty of fingers being pointed but the reality is that, in an interconnected global economy, there’s rarely one single factor or cause for inflation and rising costs. The most commonly cited drivers for food cost inflation in Canada are:

• Supply chain disruptions: Caused initially by pandemic-related constraints, many factories shut down, causing limited supply for vital manufacturing capabilities and components. Freight routes got clogged, leading to limited supply.  
• Unfavourable growing conditions: The recent wildfires, and a severe drought in 2021 impacted farming yields. This summary from StatsCan goes into more detail on the topic.
• Higher energy and production costs: As noted earlier, gas prices have risen 66.5% since May 2020. Energy prices have surged as well. Energy and gas prices have a significant impact on grocery stores, increasing the cost of their energy-intensive facilities (e.g. freezers require a lot of energy) as well as the cost of transporting food items.
• A declining Canadian dollar: Canada imports billions of dollars worth of food from the U.S., and the value of our dollar has fallen in recent years. The Canadian dollar was worth 76 cents USD on Dec. 27, a decline of 8.4% from June 2021 when it traded at 83 cents U.S. A declining Canadian dollar makes our food imports more expensive for consumers.
• Grocery store pricing policies: Many Canadians blame rising food prices on grocers based on what they consider price gouging by Canada’s large grocery chains. We’ll take a closer look at this in the next section.
• The War in Ukraine: Often referred to as the “breadbasket of Europe”, the conflict in the Ukraine has limited farming production. According to a CTV article, in 2022 the amount of land planted with grain fell to 11.6 million hectares (28.6 million acres) from 16 million hectares (about 40 million acres) in 2021.

Are Food Price Increases a Global Problem?

If these underlying causes of Canada’s rising food prices factors are global in nature, we should see similar inflation in other countries across the globe. Looking to Organisation for Economic

Co-operation and Development (OECD) data, we can get a measure of food inflation by nation for some recent years, as shown in the table below. It shows a widespread problem of food price increases across a variety of countries, with Canada’s price growth somewhere near the middle of the pack. Another data reference, a report on global food prices published by e-commerce platform UBuy, found that Canada’s food inflation was among the lowest of those measured in the global study.

Are the Grocery Stores to Blame for Rising Food Prices?

As mentioned earlier, many Canadians are aiming their frustration at Canada’s largest grocery chains, accusing them of profiteering during times of economic duress. Is it fair and accurate? Well, naturally, the CEO’s say no – and that the profits are coming from other areas such as cosmetics and financial services. Industry associations point out the razor-thin margins on grocery store products. But despite these rebuttals, corporate earnings reports sometimes tell more truth than the talking points shared with the media.

A December 2023 report by The Future of Work highlighted this fact: “Industry-wide, food retail profits have more than doubled from levels typical before COVID. Food retailers earned net income of almost $6 billion in 2022, compared to $2.4 billion in 2019.” Many Canadians have shifted their food shopping habits, purchasing from Costco or Walmart rather than traditional grocers, helping drive a surge in stock prices.  

The Federal Government has waded into the fray, announcing last month that it would demand grocery-store executives restore price stability as part of a suite of measures aimed at making life more affordable. On the table is a Grocer Code of Conduct that would add measures to ensure fair pricing in grocery aisles. The draft Code of Conduct is available online. Canada’s biggest grocers, Loblaw Cos., Metro Inc., Empire Co., Walmart Inc. and Costco Wholesale Corp., have been asked to sign. Some grocers have expressed concern, and as of writing the Code of Conduct has not been signed and formalized.

Adding to the PR headaches for grocers are infighting with lawsuits and accusations of cost fixing, a rising chorus of consumer voices complaining of “shrinkflation”, and reports of food manufacturers swapping in low-quality products.  

How are Canadians coping with the changes? 

At LARi Insight, we always welcome open-ended comments from our market research panel. In addition to completing our survey responses, they told us the following:

• Financial challenges can inspire new habits, sometimes positive ones: Anne H. from Scarborough, Ontario told us: “I’m trying to decrease waste, especially around food. I only buy what I will use fully. I’m also growing more food myself and preserving more food items.”
• Some consumers are downgrading food quality due to necessity: Liz M. from Fredericton, NB told us: “I eat less healthy items a couple of times a week. They aren’t good for me, but they’re less costly.” 
• Many Canadians are eating out less: “I had already cut down on eating out the year before. Now I almost never eat out or get takeout,” said Doug F. from PEI 

What are the impacts of food prices on Canadians?

There is an obvious impact of rising food prices in terms of Canadians’ budget and disposable income. Some feel they have been pushed to the brink of poverty. Food bank usage is at an all-time high, suggesting that the ability of our charitable safety nets to provide for those in need may be tested like never before. There are ripples of change caused by economic activity in one area that will inevitably spread to others. For example:

• Poorer diet and nutrition arising from buying the cheapest food can impact our health and the shared cost of healthcare
• Consumer spending in non-food categories will diminish because, as one survey respondent put it, “there’s more month at the end of the money.”
• Hunger may become a more prominent social issue in Canada, requiring additional programs and support

Where do we go from here?

Rising food prices in Canada are expected to diminish in the coming year, but no one is expecting grocery retailers to ratchet back prices to anywhere near pre-pandemic levels. We asked Canadians what they expect in the coming year: 31% expect a slight increase in inflation, and 20.5% expect a significant increase. Roughly a quarter (24.0%) expect “about the same”, and 20.1% expect some degree of decline in inflation. Some industry experts say we should expect a 2.5 – 4.5% increase in food prices in the coming year.

We may see action from the effort to align Canada’s major grocers around a shared Grocer Code of Conduct that introduces some controls on food inflation. But for now the prevailing advice is hang on, hope, and cope.

Explore The Rising Cost of Common Groceries with Our Canada Food Price Inflation Calculator

With complex topics like inflation, sometimes it’s best to see it for yourself. That’s why we created the LARi Insight Food Price Inflation Calculator. With one click you can compare the impact of inflation on a variety of common grocery items such as milk, bacon, and potatoes. It brings new perspective to the growing cost of filling our shopping carts.

At LARi Insight, we aim to help equip Canadians with tools, data, and information to take control of your financial future. Our budget calculator is one tool that can help you manage your monthly spending and, hopefully, store away some extra emergency funds for any unexpected surprises of the future.

The Financial Impacts of Canadian Inflation

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