Weak dollar, trade tensions putting food prices under pressure: Loblaw
Food prices are under pressure as the weak Canadian dollar and trade tensions threaten to drive up costs, Loblaw Companies Ltd. said in its March Food Inflation report.
The latest Consumer Price Index report from Statistics Canada saw inflation soar to 2.6% in February.
Loblaw said food inflation in February was mainly driven by higher meat and produce prices.
Ottawa has imposed counter-tariffs on a range of U.S. goods sold in grocery stores, namely a 25% increase on orange juice, rice, produce and personal care items.
Loblaw said food prices have remained relatively unimpacted so far by the counter-tariffs, as retailers sell through products on shelf and in inventory.
Produce is beginning to see increases, and Loblaw said it expects meat and pantry staples like pasta and condiments to follow.
The grocer said it “continues to work with vendors to minimize the impacts for customers, including searching for alternatives to U.S. products.”
The U.S. tariffs on Canadian-produced steel, aluminum and corrugate are expected to increase costs throughout food supply chains, Loblaw’s report reads.
“Both steel and aluminum cans (impacting canned goods, pop and beer) as well as other packaging materials may see increases, putting upward pressure on the final cost of goods,” the company stated.
Elsewhere, Loblaw said higher commodity prices are the “new norm.”
Retail prices for coffee are beginning to rise due to extreme weather in growing regions. Cocoa prices have stabilized in recent weeks, “albeit at extremely high levels” due to supply issues, the report states.
The cost of sugar is down 12% since the last quarter, with increased supply of sugarcane outpacing current demand.
