Canada’s inflation rate decelerated to 3.4 per cent in the year up to May, Statistics Canada said Tuesday, led by sharply lower gasoline prices. But beneath the headline slowdown in consumer prices, many facets of the cost of living are still increasing at an eye-watering pace. Grocery prices went up at an almost nine per cent pace.
Grocery prices went up at an almost nine per cent pace. That’s barely lower than the 9.1 per cent pace clocked in April, and still almost three times the inflation rate.
Food prices have been increasing at a faster pace than the official inflation rate for more than a year now.
Despite gasoline prices dropping enough to drop the overall inflation rate by a full percentage point? Surely transport costs must have gone down significantly. What ever could be going on, here?
Although a little outdated being from Nov 2022, Statistics Canada has a great breakdown of what contributes to the rising costs of food beyond transportation costs.
I’m not saying corporate profit-taking isn’t affecting prices or that we shouldn’t do anything about it, just that there’s a lot going on here. Last time I looked Loblaw’s profit margin had increased from 2% to 3% from 2020-2023. A 50% increase is a lot and I think they’re scum for doing that, but it doesn’t explain the overall ~30% increase in food prices.
Long read ahead.
Loblaws is FAR from alone in terms of being part of the cause. I work in food manufacturing for a very big company.
For at least two years in a row now, my company has held a large meeting to tell us that they are making record profits.
This company has its hand in a pretty large variety of products. If you live in Canada, the US, or Mexico, there is a very good chance that you have either eaten their products or purchased them. If you’re from the UK, you’ve probably seen some of their products on shelves, too. For my job safety, I will not disclose which company, although it’s probably not the one you’re thinking of. They have a LOT of sub-brands, and I probably would have never made the connection between them if I didn’t work with those products myself.
I agree that this goes beyond just Loblaws. Every rung on the ladder is trying to squeeze as much profit as possible. You have the ingredient manufacturers. You have the packaging manufacturers. You have the transportation companies. You have the food manufacturers. You have the retailers. Many manufacturing companies work with multiple suppliers. Every step adds more to the cost. Everyone wants their profits.
If companies throughout the chain decide to charge more, the cost can become compounded. My company sells to Loblaws. If my company charges new high prices, Loblaws’ will use my companies new high prices as a base-line for their own profit goals. That 20% to 27% difference is likely from profiteering behind the scenes. Some of our products have nearly doubled in retail cost over the last 5 years.
I work at one company. I previously believed that it wasn’t that big. I doubt that we are the only company to be like this within Canada.
Maybe it’s time for the Canadian government to now focus on what’s actually causing inflation, instead of jacking up interest rates quarter over quarter. Maybe go after the grocery and gasoline retailers for their quite clearly collusive behaviour. Because putting my mortgage up another $1,000 a month isn’t going to fix that.
The Canadian government does not control the bank of canada
In some ways it will because now your disposable income will be reduced thereby crimping your ability to spend on consumer goods. You have to remember that the last time housing pricing went through the roof decades ago, BOC jacked up interest rates in order to bring prices back to earth and yes home owners who bought at the wrong time did suffer. These historically low interest rates are as much to blame for the housing price increases as the lack of new builds supply due to restrictive regulations and zoning policies. If we are to solve the affordability problem, housing prices will have to decline. Housing as the main wealth creation tool for the upper middle class of Canada and as a big driver of the economic growth has undesirable consequences that we are facing now.
I don’t see how the overall rate could decline with grocery prices increasing 9.1%… our overall buying power is still that much lower. I thought I made decent money but not with what’s going on out there now.
A median family only spends about 10% of their income on groceries in Canada, down around 7% in the US.
What is a ‘median’ family, though? We have 2 kids under 10 and let me tell you groceries ain’t cheap.
Median family income (after tax) for 2021 was $68k. Highest was Alberta at $77k, the lowest NB with $60k.
I couldn’t find median, but average household size is 2.9 people.
https://www150.statcan.gc.ca/n1/pub/11-627-m/11-627-m2023020-eng.htm
Because the other 90% goes to rent or mortgage, right?
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Sooo… by slowdown they mean prices will stop rising, but what about lowering?
A deflationary environment is very bad generally because it incentivizes people to not spend money which slows down the economy and hurts everyone.
The healthier thing to do is for wages to rise. Wages are currently rising but slower than inflation (2.9% yoy as of january), and that should make you mad.
Bullshit they literally changed the formula
Changing the formula isn’t a problem, it changes all the time (and SHOULD change all the time). In my opinion the problem is the choice of headline from CBC. Even the article acknowledges the headline inflation rate is being influenced downwards by volatile items, and that economists as well as the BoC don’t really care what the headline rate is. All eyes are still on the underlying “warm” parts of more consistent categories.
I agree that the basket of goods should change, but it’s also weird that they’ve been changing it every year that they’ve been worried about runaway inflation.
It normally changes every few years. Not every year for the last 3.Basket of goods changes when the goods people are buying changes.
Basket of goods might have included lobster when lobster was a cheap source of protein, but it sure as hell isn’t going to include lobster today.
