Inflation on food
Statistics Canada said items that contributed most to the year-over-year price acceleration included fresh vegetables, for which prices rose 3.7% fresh or frozen beef at 16.2% growth, and coffee and tea at 13.4%. Prices for food purchased from restaurants also rose at a faster rate in April, increasing 3.6% year-over-year after a 3.2% hike in March.
Shoppers feeling the weight of their growing grocery bills have likely noticed it most at the meat counter, said University of Guelph professor and food economist Mike von Massow, adding that beef, in particular, was noticeably more expensive. That’s partly because demand for beef is higher at this time of year, as families dust off their barbecues for the summer grilling season, but von Massow said it’s mostly the result of recent supply disruptions.
“We had some dry weather in the last few years and lower profitability, so in that case cow herds decrease in size and it takes awhile for those numbers to come back,” von Massow said. “Cow herds are the factory of beef production. So if you have fewer cows, you have fewer calves. If you have fewer calves, you have less mature beef that is being harvested and processed into beef.”
Meanwhile, coffee prices are rising as some producers experience lower yields due to extreme weather or changes in temperature, he said, noting “coffee is kind of the canary in the coal mine relative to climate change.”
“Coffee is very temperature dependent,” von Massow said. He added that a weak Canadian dollar doesn’t make matters better. Coffee is produced elsewhere, meaning a weak loonie makes it more expensive to import.
The effect of tariffs
It’s also a product subject to Canada’s retaliatory tariffs against the U.S. While the U.S. doesn’t produce a lot of coffee, he said some of the brokers that Canada relies on to buy coffee from are based in that country. “I expect that Canadians will start buying coffee from other places rather than from the U.S. in order to avoid those tariffs, but that adjustment takes some time,” he said.
Von Massow said the effect of the ongoing trade war has been quite limited on Canada’s grocery inflation overall so far, but that could start to change in the coming months. Some of Canada’s large grocers have warned of looming price hikes due to added costs from U.S.-Canada tariffs.
Loblaw Cos. Ltd. chief executive Per Bank said last week that the number of tariff-hit products at the grocery store could soon spike as pre-tariff inventory runs out. Loblaw has been aggressive in marking products on display affected by tariffs, a tally that last week reached over 1,000 items. But Bank said the total will rise to more than 3,000 by next week and could peak at double that number within the next two months.
