Loblaw shares update on produce, oil and fertilizer prices in new report

Loblaw Companies has released its "Food Inflation Report" for May. 

Canada’s domestic produce season is underway, but tighter import supply earlier this year—particularly from Mexico—contributed to higher costs in the produce market coming into spring, Loblaw said. 

Seasonal transition periods (from imported to domestic) combined with weather variability in both Canada and the U.S. have created supply uncertainty for some fresh categories, the report states. 

Higher crude oil prices continue to increase transportation and freight-related costs across the supply chain, Loblaw said, while also impacting the cost of resin-based packaging materials used in thousands of food, household and personal care products.

Resin prices rose 13.7% YOY and more than 9% month-over-month.

The company warned that sustained, elevated fertilizer prices could impact future crop production costs, particularly for grains, oilseeds and animal feed.

“Over time, this can influence the cost of meat and dairy through higher feed expenses,” the report states. 

Sugar, coffee, rice and coca trend below year-ago levels as “supply conditions improve and harvest outlooks stabilize in key producing regions.”

Statistics Canada reported a 2.8% increase in inflation for April, up from 2.4% in March.

“With all this at play, Loblaw continues to carefully review any supplier cost increase requests to ensure they reflect legitimate input cost pressures and market realities,” the company said. “For our part, we’ve kept energy-related price increases from suppliers to a minimum while absorbing costs impacting our own supply chain. We’re also seeing lower prices YOY for many U.S. products, as goods that were inflated during last year’s tariff uncertainty normalize.”