Weather, supplier costs, currency headwinds and trade uncertainties weighing on food system: Loblaw

Though grocery inflation slowed in July, Loblaw Companies said Canada’s food system remains under pressure.

In its August Food Inflation report, the retailer said weather, freight, supplier costs and currency fluctuations are continuing to squeeze the food chain.

Loblaw said evolving trade negotiations between the U.S. and Canada have added even more uncertainties. Ottawa’s counter-tariffs on $27.6 billion in imports from the U.S. are set to take effect Sept. 8.

“While the outcome remains unclear, additional trade measures could impact a wide variety of goods—including food—in the months ahead,” Loblaw’s report said. 

More than 70% of the food Loblaw purchases is sourced from and/or prepared in Canada, according to the report. 

“Supporting Canadian suppliers strengthens food security, builds more resilient supply chains and helps deliver the quality, selection and value customers expect. It is not about buying Canadian at any cost. It is about making thoughtful sourcing choices that balance affordability, assortment, quality and cost for customers,” Loblaw said. 

Statistics Canada reported that inflation for food purchased from stores slowed to 3.1% year-over-year in June, down from 3.9% in June. 

As grocery prices remain elevated, Loblaw said it’s seeing “clear signs” that shoppers are making deliberate choices to stretch their budgets, including switching to discount stores, choosing value brands and shopping promotions. 

Consumers are also trading down within categories, the company said, such as shopping less organic produce. Loblaw said fresh and centre-store are showing more resilience, while apparel, home, entertainment, OTC, cosmetics, eyewear and HBA are under increasing pressure.

Loblaw said its discount banners No Frills and Maxi are growing their market share, while the retailer’s private label brands like No Name continue to outperform national brands. PC Optimum redemption dollars are up “meaningfully” this year, the company said.