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Execs from grocery giants push back against inflation profiteering claims

Grocery industry leaders spoke to the House of Commons agriculture committee on the 'unique confluence of events' that have led to higher food prices

Grocery executives are disputing the accusation that the sector is taking advantage of inflation to drive up their own profits.

Executives from Loblaw and Empire testified to the House of Commons agriculture committee Monday (Dec. 5) as part of the committee's study of food inflation.

"Empire does not like inflation,'' said Pierre St-Laurent, chief operating officer of Empire, the parent company of Sobeys.

Jodat Hussain, Loblaw's senior vice-president of retail finance, told MPs Loblaw has been raising prices because suppliers are charging more, and that the company's gross margins on food have remained stable.

However, Hussain said Loblaw, which sells products other than food, does not publicly disclose its margins on food alone.

"Fundamentally, grocery prices are up because the costs of products that grocers buy from suppliers have gone up,'' Hussain said.

The executive said Loblaw pushes back on suppliers when they do propose raising prices, citing its disagreement with Frito-Lay over the price of potato chips, which led to empty shelves during the dispute.

The rapidly rising cost of groceries has become a hot-button issue in politics, with food prices up 11% in October compared with a year earlier. And relief isn't expected to come any time soon.

According to the 13th edition of Canada's Food Price Report released Monday, the total cost of groceries for a family of four is expected to go up by $1,065 in 2023.

The study into food inflation by the House of Commons committee was called for by NDP agriculture critic Alistair MacGregor.

MPs on the committee also heard testimony from others in the grocery industry, including the Retail Council of Canada; Food, Health and Consumer Products of Canada; and Fruit and Vegetable Growers of Canada.

"We are experiencing a unique confluence of events -- war, extreme weather and soaring fuel prices, all piling on top of supply chain disruptions and labour shortages,'' said Karl Little, Retail Council of Canada's senior vice-president of public affairs.

The Competition Bureau announced in October that it would launch a study to examine whether the grocery sector is contributing to rising food costs. The competition watchdog is expected to provide a set of recommendations for the government in its final report, which it plans to publish in June.

The committee will also hold another meeting on food inflation on Dec. 12.

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