Canadian food prices to outpace inflation in 2021: report

As supermarkets spend more in the shift to online shopping, the costs will likely be passed on to consumers

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      The average Canadian family will spend $695 more on groceries in 2021, according to an annual food price report, the highest increase researchers have seen to date.

      The Canada’s Food Price Report, published by Dalhousie University and the University of Guelph, predicted an overall jump in Canadian food prices of three per cent to five per cent next year.

      “The food inflation rate in 2021 is likely to outpace the general inflation rate,” lead author Sylvain Charlebois wrote.

      Last year’s report forecast a two-to-four per cent increase, and predicted the average Canadian family would spend up to $12,667 on food. This year’s report predicts that amount to jump to $13,907 in 2021.

      Bakery, meat, and vegetables are the leading categories in price increases, with an anticipated price change of 3.5 to 5.5 percent for bakery items, 4.5 to 6.5 percent for meat and 4.5 to 6.5 percent for vegetables.

      COVID-19 a major reason for price increases

      The report noted that COVID-19 impacted the Canadian agri-food supply chain, such as temporary closed borders that limited access to imported raw materials and posed challenges to growers reliant on migrant labour.

      Charlebois also noted that necessary pandemic safety measures could partially be the reason for higher meat prices.

      “Relatively high requirements for manual labour and close physical working conditions common in meat processing facilities means the virus has the potential to spread quickly,” he wrote.

      With physical distancing measures implemented in processing plants, factories have been operating below regular efficiency and sometimes faced shutdowns. There was even a large temporary backlog of animals on Canadian farms.

      The pandemic has also impacted household spending choices, with Canadians spending more on food retail and less on food services throughout lockdown and quarantine periods. But as online food retail and services became more popular, many grocers and restaurants pivoted to growing e-commerce platforms.

      The costs of these investments may be passed on to consumers, accounting for higher food prices.

      The report predicts that, in 2021 as the pandemic continues, Canadians will continue to spend more on online food retail and services, resulting in higher costs for households from options like delivery and meal kits.

      Food prices continue to be a concern for Canadians

      The report stated that, over the past two decades, food inflation has surpassed general inflation. The average grocery bill for Canadians has risen 170 per cent over the past 20 years.

      Canadians are spending a greater portion of household income on food, an issue that will only get worse in 2021.

      As previously reported, higher grocery store prices aren’t likely to go down any time soon, according to Charlebois.

      In a 2020 study published by PROOF, a research team investigating household food insecurity in Canada, the team found that one in eight households in Canada are food insecure.

      That represents 4.4 million people, a number the study says is the largest recorded since Canada began monitoring food insecurity.

      The report notes that, depending on how long the pandemic continues, food insecurity may only continue to worsen, pointing to increases in food bank usage in the beginning of the pandemic.