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05/05/2022

Consumers still spending despite food inflation: Galen Weston

Loblaw president says shoppers have more money in their wallets today than pre-pandemic
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Shutterstock/Charren C

With food inflation at an all-time high, Loblaw chairman and president Galen G. Weston says customers are definitely seeking value, but the shift isn’t as dramatic as one might expect.

Though shoppers are returning to discount banners No Frills and Maxi, the company is seeing a slight swing towards price sensitivity as “opposed to a dramatic left turn,” said Weston during a call with analysts on Wednesday morning to discuss the company’s first-quarter results.

“We think that's an indication of the consumer having more money in their wallets still, than they would have had pre-COVID levels,” said Weston. “But we're watching it very carefully because prices are continuing to grow.”

Statistics Canada said the annual rate of inflation hit 6.7% in March, the fastest year-over-year increase in the consumer price index in more than 31 years. And grocery store prices rose 8.7% compared with last year.

Despite this, Weston said price sensitivities have returned to pre-COVID levels. “We're not yet seeing that expected shift that comes when you have plus 6% inflation for month after month.”

Weston said data from Loblaw’s financial services brand, PC Financial, gives it insight into broader consumer spending habits. Loblaw CFO Richard Dufresne said spending was on the rise along with the rate at which its customers pay down their credit card balance.

This, said Dufresne, is an “indicator to us that people still have money in their pockets. So we’re monitoring this very carefully as an indicator of the health of the Canadian consumer.”