Canada's food inflation is slowing—but the squeeze isn't over
Canada’s food inflation rate eased to 5.4% in February 2026, down from 7.3% previously. At first glance, this looks like progress. But the reality behind the numbers suggests Canadians shouldn’t celebrate just yet.
Food inflation remains 3.6 percentage points above overall inflation, which means groceries are still becoming more expensive faster than most other goods in the economy. While the pace of increase has slowed, the pressure on household budgets has not disappeared.
READ: Annual inflation cools to 1.8% in February, StatCan says
Canada also continues to stand out internationally—and not in a good way. Among the G7 countries, Canada still posts the highest food inflation rate. According to Trading Economics, Canada sits at 5.4%, followed by Japan at 3.9% (January 2026), the United Kingdom at 3.6% (January 2026), the United States at 3.1%, Italy at 2.6%, France at 2.0%, and Germany at just 1.5%. Even after the recent decline, Canada remains firmly at the top of the G7 ranking and Canada also has the largest gap between general and food inflation.
Some of this year’s data is influenced by the GST holiday introduced in 2025, which artificially lowered prices last year and created what economists call a base effect. Without that temporary distortion, our best estimate suggests February’s food inflation likely would have been around 3.8% to 4.0%. That would still leave Canada with the highest food inflation among G7 countries.
The categories driving the increases are also revealing. Beef prices are up 13.9% year-over-year, while pork has increased 9.2%. Bananas, long considered one of the most stable food items in grocery stores, are now up 8.1%, marking a sharp change from the past few years when banana prices barely moved. Poultry prices are up 7.2%, and even items like ice cream have risen 4.6%.
Chicken prices are particularly noteworthy. They are up more than 9% compared with last year, which is unusual for Canada’s poultry market. But the situation could have been worse. In 2025, Canada imported well over 200 million kilograms of chicken from the United States, something that has received surprisingly little attention. Those imports helped stabilize supply and prevented prices from rising even more sharply. When Canadians look at the price of chicken today, they may unknowingly have American farmers to thank.
At the same time, wages are not keeping up with grocery prices. Average hourly wages in Canada rose about 4.2% over the past year, according to new data from Statistics Canada released on Friday. Unionized workers saw wages increase from $38.33 to $39.75, a gain of 3.7%, while non-union workers experienced a 4.4% increase, from $35.02 to $36.57. Among permanent employees, average hourly wages rose from $36.80 to $38.49, a 4.6% increase.
While these wage increases exceed general inflation, they still fall short of food inflation at 5.4%. The result is that Canadians’ purchasing power for groceries continues to decline. People may be earning more, but they still feel like they are losing ground at the checkout line.
This helps explain why many Canadians feel stuck financially. Even though inflation headlines suggest improvement, the everyday experience at the grocery store tells a different story.
Looking ahead, the situation may become more complicated. Global tensions involving Iran and the broader Middle East continue to keep oil prices elevated, and energy costs play a critical role in food production, processing, transportation, and retail. If oil prices remain stubbornly high—or move above $100 per barrel—those costs will inevitably ripple through the food supply chain.
At the same time, Canada’s labour market is showing signs of stress. With more Canadians losing full-time jobs in recent months, household financial stability is weakening. When incomes become uncertain, even modest increases in food prices can create significant hardship.
Taken together, these forces suggest that food inflation could begin moving upward again as early as April or May. The recent slowdown may therefore prove temporary rather than a lasting turning point.
For now, Canadians remain caught between rising grocery prices, wages that are not quite keeping up, and a global environment that continues to push food costs higher. Even with inflation slowing, the reality for many households is clear: the squeeze at the grocery store isn’t over yet.
