As a result, the average Canadian household is now about $66,000. In September, food inflation was up four percent from one year earlier. Unfortunately, the current federal government recently made the questionable decision to terminate these 25 percent counter-tariffs. With food import costs rising still, this is a crucial change, indeed. Food economist Michael von Massow of the University of Guelph shares that the effects of this policy change are felt very differently. His research brings an important nuance to that discussion.
September saw food inflation jump by a full half-percentage point to 2.4 percent, up from 1.9 percent in August. Combined, this shift foreshadows a dark new reality for consumers. This all became convoluted once all major grocery retailers—including Loblaw, Empire, and Metro—started reporting their own internal inflation measures. These figures were both less than or approximately in line with Statistics Canada’s metrics over the second quarter. Meat, dairy, and eggs are the main contributors to the skyrocketing cost of groceries. Annual price increases have been moving upward since a historic low in April 2021.
Michael von Massow noted that when counter-tariffs are removed, it would logically reduce the inflation of food prices. The headlines tell a simple story, but the truth is far more complicated. “We’d actually expected that with the retaliatory tariffs being reduced, that maybe we could get a little bit of an ease in food price inflation,” he said. Continuing tariff-related tensions remain the third most important concern. While inflation eases elsewhere, Canadians’ craving to “Buy Canadian” will continue to prop up food prices through the end of this year.
Climate change is already having an impact on food prices. For example, exorbitant beef prices have played a large role in our food inflation, as cattle herds were negatively impacted by the prolonged dry spell across Western Canada. Von Massow explained, “Cows are the factory of beef production and if we don’t have as many cows, it takes a while.” This indicates that changes in beef supply will still play a major role in driving price movements.
The price of oranges decreased in September as the fruit ripened and moved more quickly through the supply chain. This quick turnover meant they were able to pass on lower costs, giving some reprieve to consumers who are seeing prices spike in other areas. Fresh vegetable prices were up 1.9 percent year-over-year in September, after posting a decrease in August.
Sugar and confectionary costs jumped by 9.2 percent this month. That’s up from 5.8 percent last month, further illustrating an area where consumers are getting hammered. Annual inflation rate on all items got faster to 2.4 percent in September, adding more confusion to the economic environment for Canadian families.
Andrew Grantham, an economist for CIBC, underlined how important environmental factors have been in determining grocery prices. He stated, “When it comes to grocery prices, we have seen that there are environmental factors that play into some of those, particularly fresh fruits, vegetables.”
Given the current economic climate, it seems likely that Canadian consumers will be subject to further grocery store pain. Irene Nattel, a market analyst, anticipates ongoing shifts in consumer behavior, noting that “against this backdrop, we expect ongoing consumer trade-down to discount banners/channels and private label products with sustained promotional/competitive intensity.”
