Canadians that have turned to grocery store flyers and coupon-cutting may need to look for even more savings.
Last week, Metro CEO Eric La Flèche told analysts on an earnings call that the company was expecting it would have to pass on some higher costs from suppliers as an industry-wide blackout period for price hikes would end starting Feb 1.
That period, food researcher and Dalhousie University Agri-Food Analytics Lab director Sylvain Charlebois said, is often seen from November until January but when it ends, Canadians are left with the bill.
“So the blackout period, of course, leads to higher prices, and fees a few months later leads to more higher food prices,” Charlebois said. “I don’t see any benefit for consumers at this point.”
The price increases come from suppliers, but when the freeze ends, the costs are often passed on to consumers.
In an email to Global News, the Retail Council of Canada (RCC), a non-profit association that represents retailers including Canadian grocers, said it was common for some grocers to “push back on vendor price increases” from the period just before Christmas until shortly after.
Spokesperson Michelle Wasylyshen also said that grocers are food distributors: they buy goods from suppliers and sell to customers. That means they’re largely dependent on what they are asked to pay for the products. According to the RCC, 70 to 80 per cent of checkout prices arise from vendors before the food even gets to grocers.
Food economist from the University of Guelph, Mike von Massow, said the issue faced with price freezes is they can “bite in two directions.”
“If you say we’re going to contract this and prices have gone down, unless you have some sort of out in the contract, those suppliers will expect that same amount of money because they’ve contracted it as well,” he told Global News in an interview.
Global News reached out to major Canadian grocers for confirmation on whether such price increases will happen and for which items. A Metro spokesperson referred to La Flèche’s comments last week. Loblaw deferred to the RCC, while Sobeys did not respond by publication.
Walmart Canada, meanwhile, told Global News it “continually” has conversations with its suppliers “to push back on unnecessary price increases year-round.”
“We remain fully focused on delivering low prices every day, including recently reducing prices on key staples like, sugar, cheese, salty snacks, fluid dairy, rice, flour and numerous produce staples,” a spokesperson for the company said in an email.
What products could increase in price?
When it comes to what products could go up in cost, both von Massow and Charlebois say it can often vary depending on the products made in Canada and even those made in store.
Charlebois said it can often be big national brands that see the costs rise after the price freezes, so he suggests looking to private labels like in-store brands.
“The private labels are owned by the grocers themselves. They deal with contractual manufacturers, so there are no fees or it’s just different,” he said.
“The starting structure is different because they want to promote their own labels and they are becoming more and more popular. So if you want to immune yourself from this insanity, I would say private labels, store brands.”
Domestically-produced items can also be lower in price, in part due to having to not ship them as far to stores. Von Massow said items like carrots, potatoes or beets are less likely to go up in price, while things like oranges or orange juice — an item La Fleche suggested could see a price increase due to issues with orange crops — may be more likely to see that jump.
He also noted extreme weather, like recent flooding in California, could also have an impact due to damaged crops.
It’s in imported products that Canadians might see a change with the “blackout”.
“I think that anything that is international or relatively, quote unquote fresher will have the potential to go up in price, whereas anything that was domestically produced or has been in storage in Canada is unlikely to come up in price,” he said.
'Some reason for optimism' as inflation cools
The federal government says it’s still working to stabilize prices, including through more grocery competition.
Industry Minister Francois-Philippe Champagne said last week that he’s been reaching out to international grocers in the hopes they will open up shop in Canada — a reiteration of previous comments he made in October 2023 about calling global CEOs.
The minister says he spoke to one foreign grocer Tuesday morning as part of his efforts to court new players to join the Canadian grocery sector — but did not specify which one.
Champagne met with Canadian grocers in the fall about food inflation and demanded they create plans to stabilize grocery prices or face consequences, including potential tax measures.
Last week, he expressed disappointment that the grocers have not been more transparent about their plans, but has stayed mum on whether the federal government plans to punish them for it.
Charlebois, however, is wary of what success there could be in this pitch to international grocers.
“If a grocer out there would have wanted to come to Canada, they would have come already. Independent grocers are really suffering in Canada,” he said adding there is little incentive amid a pool of dominant players.
However, some see reason for hope when it comes to prices for Canadians.
Overall inflation came in at 3.4 per cent in December, an uptick from the previous month, but down substantially from the 8.1.-per cent peak seen in June 2022. Food inflation was flat December, coming in at 4.7 per cent, unchanged from the previous month, but down from October’s 5.4 per cent pace.
This drop is why von Massow said he expects there could be relief soon.
“I think notwithstanding extreme weather events like we’re seeing in California right now, which are much less predictable … I think there’s some reason for optimism,” he said.
— with files from Global News’ Craig Lord and The Canadian Press
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