Inflation pressures on food supply chain becoming ‘harder to predict:’ Loblaw

Energy volatility, trade uncertainty and geopolitical conflict are making it harder to predict costs across the food supply chain, Loblaw Companies said.

In its May Food Inflation Report released Tuesday (July 7), the food and pharmacy retailer said inflation pressures are getting “more complex."

Last month, Statistics Canada reported grocery inflation had accelerated to 4.3% in May—outpacing the headline inflation rate for 16 consecutive months.

Loblaw said geopolitical uncertainty can overlap with weather, harvest conditions, freight and global supply chain disruptions to influence costs. 

“Fresh produce is one example, where weather, energy, tariffs and currency movement can all affect costs at once,” Loblaw said in its report. “A weaker Canadian dollar can also add pressure because many imported products and packaging inputs are priced in U.S. dollars. This will only escalate if U.S. interest rates begin to climb.”

The grocer also pointed to soybean oil, which is used in foods as well as renewable diesel and biofuels, creating competition for the same ingredient. 

“All these factors, not to mention the reality that some commodity costs are actually easing, means Loblaw must continue to review supplier cost requests carefully—recognizing legitimate pressures while challenging increases when costs decline, stabilize or are unjustified,” the company said.

Loblaw also highlighted how tariffs are adding pressure across the produce sector, particularly for some imported Asian vegetables. 

“While the full impact varies by sourcing mix and supplier deals, these tariffs—of up to 10%—can raise landed costs and add another layer of complexity to produce pricing,” the report states.