Eating healthy is getting costlier by the month. New data shows soaring fruit and vegetable prices have replaced meat as the reigning champs of fast-rising food costs in Canada, thanks mainly to the sustained drop in the value of the loonie.
Grocers import roughly 80 per cent of the fresh food Canadians consume, experts say. Average fruit and veggie prices popped 6.9 and 8.7 per cent respectively in September – registering multi-year highs, according to Statistics Canada.
“Fruit and vegetable prices continue to heat up as [foreign exchange] headwinds push the cost of imports higher,” retail analysts at Scotiabank said in a new research note.
A plunging loonie has been fanning food inflation for some time now: Grocery prices have jumped by more than three per cent for 13 consecutive months Scotia’s note said, as supermarkets have passed higher import costs onto consumers.
And the trend isn’t about to let up. Economists at TD Bank suggested in their latest outlook that the Canadian dollar will fall to 73 cents U.S. through early 2016 (before rebounding to 75 cents by the end of the year).
“Grocers have seen input costs rise,” Scotiabank analyst Patricia Baker said. “And we expect this to continue.”
Here’s Baker’s chart showing food inflation by category. After leading the pack with double-digit gains over the past couple of years, meat was overtaken by fruits and vegetables last month:
‘Fruit and vegetable prices continue to heat up as [foreign exchange] headwinds push the cost of imports higher’
The outlook for meat prices is pretty uncertain at this point. Supply dynamics for beef and pork are improving, while the meat industry will likely feel ongoing tremors from the World Health Organization’s damning report this week linking red and processed meat to higher risks of cancer.
Beef consumption in Canada is already softening according to survey results released by the University of Guelph’s Food Institute this week, mainly because of the red meat’s soaring costs.
More than half of the country saw average prices rise more than four per cent for food sold through stores last month, with consumers in four provinces seeing the cost of their basket of groceries climb more than five per cent in September compared to last fall.
Some experts say the country’s largest grocers – Loblaw, Empire (which owns Sobeys and Safeway) and Metro – have had an easier time passing on higher costs to consumers as competition between them and the likes of Walmart has eased, an easing enabled in part by the departure of Target Canada earlier this year.
Consolidation has also served to dampen price competition and promotions, some experts suggest.
Scotia’s Baker noted price growth in Atlantic Canada led the country last month, “as the competitive backdrop remained tamer.” But in British Columbia and Saskatchewan, price growth also “remains elevated.”
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