The grocery price freeze is over — so brace yourself for even bigger food bills soon
Winter holiday truce in grocery price war is over, and consumers will foot the bill
The holiday price freeze put in place by some of Canada's biggest grocery chains has hit its expiry date, so shoppers should brace themselves for news that could be hard to swallow: get ready for your food bill to go up. By a lot. Again.
Loblaws made headlines last fall when it announced it would freeze prices on hundreds of its in-house No Name brand through the holiday season. The grocery chain pitched the plan as a salve for cost-conscious shoppers hit hard by high inflation, but people in the industry quickly panned it as little more than a publicity stunt, since grocery chains typically implement similar price freezes over that period, refusing to accept any price hikes from their suppliers during the critical shopping season.
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Loblaws pledged in October that No Name-branded grocery staples wouldn't see price increases until the end of January at least. It's now February, and the chain told CBC News in a statement this week that it plans to keep prices where they are "wherever possible" but warned that many prices may well go up in the coming weeks.
"Once the price freeze ends, customers can expect some prices may increase, but as mentioned originally, we will continue to hold most of our No Name prices flat," spokesperson Catherine Thomas said. "The cost to stock our shelves has gone up, month after month."
Montreal-based chain Metro sang a similar tune at its annual general meeting last month, with CEO Eric La Flèche telling reporters that the chain had received more than 27,000 requests from its suppliers last year to raise prices by more than 10 per cent. That's more than three times the normal level.
"There are cost increases coming, and we expect that some of these cost increases will be reflected at retail," he told reporters at a media briefing on Jan. 24. "We are going to do our best to make sure that price increases are gradual and progressive to protect prices as much as possible [but] unfortunately, inflation is continuing."
Frito-Lay hiking prices in Canada by 10%
Snack giant Frito-Lay is among those upping the pressure. The U.S. company, which is owned by Pepsi, has raised the prices on its products in Canada by 10 per cent, according to the Canadian Federation of Independent Grocers.
Spokesperson Gary Sands told CBC News in a statement that though he doesn't speak for major chains like Metro, Loblaws and Halifax-based Sobey's, the nearly 7,000 small businesses the group represents are in no position to swallow that cost increase.
"If you are an independent grocer on very tight margins, around two per cent, and you get handed double-digit increases in any product, you have no choice but to pass it on," he said.
Shoppers like Palaash Tiwari know all too well that prices keep going up. Shopping for food in Toronto on Wednesday, Tiwari told CBC News that he's made major changes to his diet in recent months, like buying less and cheaper types of meat, trying to save money where he can. He's also basically stopped going out to restaurants because of the prohibitive cost.
"People have to make choices on what they want to consume," he said. "People need to find their own alternative."
Why fresh produce is so pricey
Of course, not every type of food is going up at the same pace.
Statistics Canada data released this week shows that a slew of grocery items have seen double-digit price increases, beyond what is normal during winter months. The retail price of tomatoes has gone from $4.57 a kilogram in October to $6.99 in December — an eye-watering increase of more than 52 per cent in just two months.
Celery and grapes are almost as bad, with price increases of 49 and 46 per cent, respectively, in only two months. And foods like apples, broccoli and iceberg lettuce aren't far behind.
Most of the biggest increases right now are in fresh fruits and vegetables, and there's a very good reason for that, according to Mike von Massow, a food economist at the University of Guelph.
"If you look out your window there's snow on the ground [so] we're not producing ... fruits and vegetables to a significant degree."
Almost all the fresh produce Canadians consume in the winter comes through the U.S. either directly or indirectly, so that makes them subject to higher costs all along the supply chain. The transport costs alone are significant, but this year has seen major price hikes for things like tomatoes and lettuce because of what's happening in the Salinas Valley in California.
Much of the North American lettuce crop comes from the region, which was hit by a virus in November that took a bite out of supply. Record-setting drought in the area in the fall was then followed by flooding last month, which played havoc on the supply of all kinds of water-intensive crops like celery, broccoli and grapes.
"What's happening now is almost this perfect storm of issues which are creating upward pressure on almost everything," von Massow said.
Relief in the spring?
It may be hard to see while perusing the aisles of the local grocery store, but von Massow can see relief coming just over the horizon for some of those relentless price increases.
"We'll probably start seeing some relief in the spring as we get to the Canadian production season," he said. "We won't be as susceptible to imports which are being punished by the exchange rate and other things."
Until then, shoppers like Ethena Dennie in Toronto will keep doing what they've been doing, shopping around for bargains, and replacing their usual staples with cheaper alternatives where possible.
"One lettuce is so expensive," she told CBC News outside her local grocery store on Wednesday. "The doctor didn't tell me to eat lettuce so I don't have to buy it, so I just left it.
"The price is going up [but] my pay is not going up. It's just staying at the same level."
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