Canadian grocery prices will continue to skyrocket next year

WATCH: Food prices are rising quickly. As Reid Fiest reports, there's no avoiding the fact it's going to cost us all a lot more to eat.

For the fourth year in a row, the increase in food prices is expected to outpace inflation next year.

The rise will cost the average Canadian household an additional $345 in 2016.

The Food Price Report 2016 released Wednesday predicts food inflation rates to rise by between two and four per cent.

“Canada is actually the only industrialized country in the world currently, right now, with a food inflation rate of over three per cent,” said Sylvain Charlebois, professor of food distribution and policy at the Food Institute at the University of Guelph.

The price of meat, fruits, vegetables and nuts will lead the price increases. The cost of dairy, eggs and grains will largely remain stable, predicted to see the most modest increases, or none at all.

READ MORE: Meat no longer leading supermarket prices higher — it’s veggies

It’s a continuation of price increases already seen in 2015, and can largely be pinned on the sinking loonie.

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“A weaker currency was really the story in 2015 and we are expecting that to continue to some extent in 2016,” Charlebois said.

“Our currency really has a huge impact on how we consume food.”

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Consumers are shopping smarter, making sacrifices

As prices increase consumers are becoming more savvy.

“Consumers are actually trying to do their best to protect their margins,” Charlebois said. “We suspect that there’s lots of market discipline at the retailing level right now.”

READ MORE: Going Hungry: Food bank visits spike across Canada – in Alberta most of all

And for people living paycheque to paycheque, that means making hard decisions.

“In a zero-growth, zero-interest rate environment, where salaries aren’t increasing as much, it becomes challenging for consumers to have access to affordable food,” Charlebois said.

“What it means essentially, is they’re going to have to sacrifice something to be able to feed themselves.”

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WATCH: Meeting basic food needs during the holidays

Rising meat prices creating more vegetarians?

The rise in meat prices might even be fueling vegetarianism, the report suggests, with many Canadians looking for protein alternatives as costs — in particular of beef — continue to climb.

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In the last 12 months, 27.5 per cent of respondents to a survey conducted by the institute agreed they have been “forced to look for alternate sources of protein”, with 8.8 per cent strongly agreeing to the statement.

The same survey found that 37.9 per cent of respondents agreed they have reduced or stopped consuming beef in the previous year.

“We didn’t expect that number to be as high, so it means that consumers are slowly opening their minds to other options than just buying their favourite steak to put on the barbecue.”

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READ MORE: Why Canadians are already cutting back on red meat

Most survey respondents, 62.1 per cent, said they stopped or reduced their beef consumption for financial reasons, 43.1 per cent agreed it was for health and food safety reasons, 24.1 per cent said for environmental reasons, and 22.4 per cent said it was for ethical reasons.

Despite the expensive forecast, Canada still has relatively low food prices, Charlebois said, and it’s of high quality.

“So yes, we are paying more for food but we are getting more.”

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