December 2, 2014 7:00 am
Updated: December 2, 2014 7:29 pm

Here’s what’s in store for supermarket prices next year

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WATCH: Global’s Sean O’Shea tells us why food prices are expected to rise in the coming year.

Expect packages for chips, bacon, yogurt and other food products to continue slimming down next year, while the surge in red meat prices will similarly be pared back.

Those are two predictions from researchers at the University of Guelph’s new Food Institute, who released on Tuesday their 2015 outlook for grocery prices.

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Overall, prices at the supermarket are expected to collectively rise between 0.3 per cent at the low end and 2.4 per cent at the high end of the researchers’ forecast.

That’s roughly within broader inflation trends but down from the 2.8 per cent rise in 2014, the researchers said.

“We expect prices … to be relatively stable in the coming year,” said Sylvain Charlebois, a lead author and Guelph food industry professor.

A major force acting on food prices in 2015 will be the tug-of-war between lower oil prices and a weaker loonie; the former applying downward pressure on food input costs, the latter upward pressure on retail prices.

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Meat prices

A degree of relief is coming for barbecue lovers across Canada, the report suggests. “With decreased feed and fuel prices expected in 2015, meat prices will stabilize,” the report said.

Disease and supply constraints for pork and beef this year have sent average red meat prices surging 12.4 per cent, with many cuts experiencing gains well in excess of that.

MORE: Time to go vegetarian? Meat prices remain ‘persistently strong’

But Charlebois said the issues affecting pork prices – namely a virus called PED that’s reduced pig stocks – have been “short-lived” this year (though damaging). Increases in beef prices also won’t be as dramatic in 2015, either, though red meat will still experience the biggest price increases next year.

Guelph’s food price report suggests meat prices will rise between 3.0 and 5.0 per cent. Vegetables will rise by a similar amount, mostly as a result of a weaker loonie.

Much of the vegetables Canadians consume are grown internationally, in California and South America. Imported produce from those countries is expected to grow more expensive, the researchers said.

“Canadians will notice the increase in vegetable prices in the winter months, or perhaps later in the year,” Charlebois noted.

Grocery wars

Still, a domestic factor which should help shoppers save money is the sustained competitive pressure between grocers and other big retailers looking to grow food sales.

The Guelph researchers suggest consumers will continue to get a deal on dairy products like milk and eggs, which were used this year as “loss leaders” to get customers in the door.

A loss leader is a product sold at a small loss in order to drive traffic volumes and higher overall sales as shoppers pick up additional items with bigger margins.

Dairy prices could fall 1.0 per cent next year, researchers say, while bread and other grain products are expected to end 2015 with little to no change from current prices.

MORE: Here’s who’s really winning Canada’s grocery wars

Small packages

Still, costs will continue to fan upward, leading processers and suppliers to play with package sizes to help consumers absorb the increases as painlessly as possible.

“Market pressures to stabilize prices for consumers come at the cost of quantities,” the report predicted. “It’s expected packages and portions will continue to shrink.”

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