Canadian food prices are expected to rise between 1% and 3% in 2018 according to the 8th edition of Canada’s Food Price Report, with annual food costs for a family of four expected to increase by $348 to $11,948.
Vegetables and food purchased at restaurants will see the highest increases, at between 4% and 6%, while fruit prices are predicted to increase between 1% and 3%, and meat, seafood and dairy are expected to rise 0 to 2%.
Jointly produced by Dalhousie University and the University of Guelph, the report says major grocers continued to treat dairy, eggs and bread as loss leaders in 2017, which put downward pressure on prices. While increases were expected in fruits, nuts and vegetables, a stronger Canadian dollar – currently worth about $0.78 U.S. – caused them to be more moderate than expected.
Ontario and Alberta are the only two provinces expected to see food prices decrease next year, thanks to a highly competitive market that will entice grocers to keep prices low.
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Minimum wage increases in the two provinces are not expected to impact prices, the report says, since most companies are discovering innovative ways to cut their operating and labour costs, leading to enhanced profit margins. A higher general inflation rate is expected to impact food prices in B.C., while the Atlantic Provinces are expected to see increases after a year of stagnation.
It also notes the aggressive discounting practices of major food retailers is keeping food prices artificially low, though the authors believe such practices cannot continue indefinitely. At the same time, increased competition from pop-up farmers markets and ready-to-eat alternatives has also had a significant impact on prices.
It says meals in the traditional sense are “slowly disappearing,” with convenience increasingly trumping price as a key consideration for consumers. The report says Americans achieved a 50-50 balance between spending at restaurants and retail in 2016, with Canada poised to reach that benchmark by 2035.
While the major grocery chains continue to lay off workers in an attempt to stem rising costs, the report says they will need to think differently and invest in new people who believe the business should embrace new approaches, new technologies and methods to follow changing demand.
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The report says major food topics in 2018 will be ongoing consumer aversion to animal proteins, the first update to the Canada Food Guide since 2007, and the continued rise of the grocerant concept.