Widespread Food Inflation: In Canada and Beyond

Widespread Food Inflation: In Canada and Beyond

There is no denying that we've feeling the pinch when shopping for essentials--especially when managing a grocery budget. Both climate change and the pandemic are causing a rise in food prices across Canada. Over the past 12 months alone, food prices have gone up 2.7%, and are predicted to rise over the coming months according to experts.

Due to the rising cost of food, nearly half of all Canadian consumers have reduced their purchases, mainly of meat products (that have spiked 10% in price), over the past 6 months. And it's no surprise.

Why are the prices of food spiking?

Below are some reasons why The Food Institute thinks we're seeing a rise in prices.

A surging cost in fertilizers: This is incredibly challenging for farmers as they now struggle to capitalize on higher prices as well as increasing supplies. Any farmers who couldn’t benefit from the higher prices due to severe drought will now run into issues when buying fertilizers, seeds, and pesticides for next season.

Shifts in demand due to the pandemic: Demand for certain items has driven prices higher and higher. Stockpiling habits coupled with poor harvests is leading to a rise in the price of products such as grain.

Impacts related to the weather: As Russia, Argentina and North America were affected by a drought, and Europe was impacted by rain, wheat prices have spiked 20%. Sugar and coffee prices are now up 25% and 56%, respectively. This is due to a drought in Brazil, who is a very large exporter and producer of both products. A severe drought in Canada that reduced crop yields by 44% has caused oat prices to double.

With the intricate logistical trade around the world: all of the reasons above have a domino-effect in how costs for consumers will be affected.

With inflation forcing consumers to innovate, some Canadians as well as community organizers say that plans to help cut the cost of their grocery bills is more important than ever. These high prices especially impact those with a low income. When choosing what area to cut costs in, people tend to cut costs on food as opposed to housing, child care and transportation.

There are ways, however, that you can cut costs.

Although it can’t necessarily solve the issues of poverty and hunger, it can help consumers stretch their dollars. Methods like couponing and taking advantage of sales is a great option wherever possible. Using coupons and monitoring sales closely can help save money, and it’s also good to make a habit of buying items such as shampoo, paper towel and cleaning products when you noticed that they are very discounted. There are also social media accounts that notify consumers of sales, offer tips, or how they can save their money through couponing. Growing your own food when you can, helps cut down on food costs as well.

a photograph of blue grocery carts in front of a grocery store

Canadians have also been noticing the increased use of a strategy called “shrinkflation”,  where food producers sell products containing less quantity without reducing its price.

“We are aware that many consumers dislike such a strategy, believing it may be dishonest, especially right now,” director of the Agri-Food Analytics Lab Dr. Sylvain Charlebois said in a summary of the study’s results. “But on the flipside, from a food waste perspective, Canadians have historically bought too much food and have wasted a lot at home.” Shrinkflation could be contributing to Canadians wasting less food at home.

If you see blank spots on shelves for the next few months, don't panic. We also expect grocers and retailers who are paying attention to be recalibrating their portfolio of brands proactively. Finding balance and developing cost-effective habits might help you and your household maintain less of a bite from the food inflation costs that we will all start to notice in the coming months. But based on current data, looking ahead to 2022: food prices are expected to remain elevated as shipping, labour and other input costs are projected to remain high.

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