Canadians should brace for a big jump in food prices within the next few months, according to a new report from economists at the Toronto-Dominion bank.

In Canada, the overall food price component of the Consumer Price Index rose by just 2.1 per cent in February, according to the latest inflation figures released Friday by Statistics Canada.

But that kind of benign inflation news — at least as far as food is concerned — is expected to end soon, TD says.

The bank's economists say we should expect food prices to rise by seven to eight per cent annually on a year-over-year basis over the next nine to 12 months.

Since food accounts for about 17 per cent of the average household's spending, an increase of that size would add about 0.2 per cent to the overall inflation rate — currently 2.2 per cent.

TD Bank expects overall inflation to peak at the 2.6 per cent level by the end of June, before falling back to 2.2 per cent by year-end.

Commodity prices soar

The authors note that food inflation has been a serious issue in emerging markets for almost a year as a series of weather calamities devastated crops and drove many commodity prices to record highs.

Since June 2010, average food prices have soared by 40 per cent, the UN says.

So far, Canada and other industrialized economies have been largely insulated from large food price increases as competitive pressures prevented retailers and producers from passing along increased costs to consumers.

"In Canada, changes in global food prices typically take about one year before they fully pass through to final goods prices," the report states.

There are already signs that food prices are about to spike higher. George Weston Ltd. — one of Canada's biggest bakers and the majority owner of grocery chain Loblaw — announced two weeks ago it would increase prices of its products by five per cent, effective Apr. 1.

The TD report says the food price inflation jump is expected to moderate later in the year, with the specifics dependant on weather, protectionist policies and demand in emerging markets.

"However, even if every agricultural commodity price were to begin falling right now, high food inflation would still persist for at least the next eight to nine months."