Canadians fare well on food-flation

March 12, 2024
Foodflation graphic showing a broken line graph rising over stalks of corn..
Food prices have peaked in the postpandemic era. But Canada has fared reasonably well when one looks at the global picture.

It is simultaneously true that while food prices notably increased in Canada last year, Canadians actually spent less on food.
This incongruous fact was due to pressure from other household costs that increased discomfortingly — mortgage rates, gasoline, taxes, utilities, and all down the list of everyday needs. Household income for many Canadians did not keep pace, especially for many pensioners on fixed incomes. 

Canadians continue to enjoy some of the lowest food costs in the world — on average between 10 and 11 per cent of a household budget, says professor Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University. Only five nations spend, on average, a lower percentage of household budget, with the United States enjoying the lowest average food costs. 

The immediate challenge for Canadians, Charlebois says, “is that changes have actually happened so quickly, a lot of households just didn’t have time to adjust.” 

Faced with the double-punch of costlier food and costlier shelter, the choice by most households is inevitable. It’s easier to spend less on food than on your mortgage. 

“That’s why when people went to the grocery store, that’s where they saved as much as possible,” Charlebois says. “You buy cheaper brands. You go to the Dollar Store, a little more often to Giant Tiger.” 

The inflation varied significantly from month to month in 2023, with some food products making comparatively huge leaps at certain parts of the year, an effect which, when combined with the unusual state of food-price inflation being higher than the overall rate of inflation, made for sticker shock. 

Such shocks aside, Canada’s food system remains among the world’s best. Canada ranked seventh among nations for “food security environment” on the 2022 Global Food Security Index, even as global food security declined, as it had in the previous two years. 

“More frequent and extensive shocks — including COVID-19, conflict, extreme weather events and soaring costs — are exacerbating the systemic issues that drive food security downward over time, weakening the resilience of the system,” the authors of the index reported. “Stakeholders in all parts of a complex and interconnected food system will need to work together to manage these risks.” 

Charlebois says the three pillars of food security are access, safety and affordability, and, he says, Canada remains near the top on two of three. 

“On access, we’re doing fine,” he says. “We grow a lot of our food in Canada. We are part of this North American bubble with the U.S., so we’re immune to a lot of the things that happen around the world. Ukraine was a good example of that; Europe was disrupted massively due to Russia’s invasion of Ukraine, but not us.” 

Canada also excels at food safety, he says. Approximately 300 people die of food-born illnesses in Canada each year, “which is, of course, a lot, but it’s nowhere near what you’d find” in some other countries and regions. 

Where Canada does fall from the top of the chart on overall food security is on the third measure. 

“The one place we struggle is with affordability,” he says. “I think we’re not doing as well as we did before. The reason why we’re not doing great is because of the fact that servicing some parts of the country is very expensive.” 

That’s part of the reason food-price inflation varies between regions. Canada’s Food Price Report 2024 — a study and forecast that has 30 co-authors from universities across the country, including Charlebois — says food-price inflation in 2023 ranged from 6.7 per cent in P.E.I. and Quebec, to five per cent in Saskatchewan. There are few statistics on Northern Canada, but the report states that all three territories will probably face higher increases than the Canadian prediction of 4.5 per cent in 2024. 

Food inflation can also vary greatly from one part of the store to another, as seen throughout 2023. 

“Overall food price inflation was going up, but certain categories were not going up as much, and certain categories were over-weighting it,” says Kelleen Wiseman, academic director and master of food and resource economics at the University of British 

Columbia’s faculty of land and food systems and another co-author of the Canada Food Price Report 2024. “There were lots of weird and interesting nuances,” she says. “Meat was going up quite a bit, oil was going up, bakery products were going up, fruit was going up, and then sort of odd things like tomato and lettuce were coming down. Some of that was seasonality.” 

Some of it was also due to factors behind the unusual “gap” between food- price inflation and the overall rate of inflation. Various factors weigh on food prices, Wiseman says, including certain labour costs, rental costs for warehouses or grocery stores, and the cost of packaging materials such as glass bottles — which alone have increased as much as 75 per cent in the recent past. 

“There’s some of those that tend to be driving it and seem to be preventing food prices from coming down as quickly as we thought. But we’re hoping that it’s all going down and slowing down.” 

Food-price inflation is not being driven so much by global supply chains, she says, as those remain “pretty robust” and can adapt reasonably quickly to short-term disruptions, be they geo-political or climatic in nature. That doesn’t mean there won’t be permanent changes to food supply lines. For example, climate change could undo the growing of lettuce in California, or avocados in Mexico, to name just two of many potential effects on what is grown where, and when. 

For now, at the end of the chain on retail shelves, Wiseman expected to see a “calming” of food prices between February and April 2024. 

Charlebois sees at least a decrease in the rate of increase from last year. This is supported by the food price report. It predicts inflation in food prices of between 2.5 and 4.5 per cent overall in 2024, which would be closer to the 10-year average — though still with considerable variance between food categories. 

The report sees five to seven per cent inflation for meat, vegetables or baked goods, but only one to three per cent inflation for dairy and fruit. 

“We anticipate that a family of four [with two teenaged children] will have an estimated expenditure of $16,297.20,” the report states. “This represents an increase of $701.79 compared to the previous year.” 

A particularly sobering finding in the report is that visits to food banks in Canada increased by 78.5 per cent between 2019 and 2022, to almost two million. 

“This is the highest level of food bank use in Canada on record.”

How to be a savvy saver 

Tips for saving on your grocery bill abound. We offer five that are practical, yet less obvious than coupons. 

A meal plan and a list: Make a weekly meal plan, write a corresponding grocery list and stick to it. Once a week, cook enough of a planned meal to refrigerate or freeze for quick meals throughout the week. Think of it as an endless supply of leftovers. Maybe you’ll even expand to preserving or canning foods when they’re in season. 

Look down: Marketers typically put the most expensive items at eye level, and push cheaper options to the low shelves. Scan up and down and see how much you save. 

Eat first: Don’t shop for groceries on an empty stomach. Think of it this way: The less you’ve put in your stomach, the more you’ll put in your cart. 

More plants: Even a couple of plant-based, meatless meals per week can lower grocery costs. Be a part-time vegetarian. 

Root out the rotted: We all sometimes end up throwing out food only because we didn’t eat it in time. Track what food you’re tossing, and stop buying that food.