WATCH ABOVE: Marianne Dimain looks into how higher food prices affect you.
Retail prices for several food products are poised to rise significantly faster than inflation this year thanks to the loonie’s collapse, but most visibly for fruits and vegetables.
“Due to a weaker dollar, edible vegetables, fruits and nuts area likely to see significant price increases,” Canadian food industry researchers at the University of Guelph said in a new forecast published Tuesday.
The researchers have revised their previous forecast—published just in December— as the loonie’s decline against the U.S. dollar quickened.
The Canadian dollar has declined more than five cents against the greenback to start 2015, adding to a rapid retreat in the currency’s value over the past year thanks in large part to diving oil prices.
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The downdraft is expected to continue, with experts calling for the loonie to hit 75 cents U.S. or lower by the end of the year. With about 80 per cent of the produce sold in Canadian supermarkets imported (and priced in U.S. dollars), the currency decline has already been felt by shoppers who will continue to see costs broadly go up.
Fruits and veggies
For food, the deep drop will be most visible in produce prices. Charlebois and fellow researchers Michael Von Massow and Dr. Paul Uys suggest veggie prices will climb by between 5.5 and 7.5 per cent this year. Fruits and nuts will edge up by between 3 and 5 per cent. Those estimates are between 2.0 and 2.5 percentage points higher than the December forecast.
“Because they are edible imported products, and there is a lack of substitutes, they are especially vulnerable to currency fluctuations,” the researchers said.
More meat
Interestingly, there’s no change to meat price expectations. That may in part be explained by a surge in pork production that’s about to hit the market.
Shortages in both beef and pork through 2013 and last year have predictably seen new hog and cattle production ramp up in recent months. Experts suggest the increase in supply in North America will prevent the kind of double-digit increases witnessed last summer.
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