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Canadians are about to face more sticker shock at the grocery store

Click to play video: 'Increasing food prices: Canadians face more grocery store sticker shock' Increasing food prices: Canadians face more grocery store sticker shock
WATCH: According to an estimate from the latest edition of Canada’s Food Price Report released on Dec. 9, Canadians could expect to see grocery prices rise – between five and seven per cent in 2022. Global’s Anne Gaviola explains why and what this means to consumers. – Dec 9, 2021

Food prices will climb by between five and seven per cent in 2022, adding nearly $1,000 a year to the grocery bill of the average family of four, according to estimates from the latest edition of Canada’s Food Price Report released on Thursday.

Restaurant meals, dairy, vegetable and bakery prices will deliver the biggest hit to Canadians’ bottom lines with expected increases of between five and eight per cent, the research shows.

Read more: Why everything you want is out of stock or more expensive

The overall increase, projected to be between five and seven per cent, is the highest yet predicted by the report, which has been forecasting food inflation for the past 12 years.

Click to play video: 'Canada’s food prices expected to rise up by 7% in 2022: report' Canada’s food prices expected to rise up by 7% in 2022: report
Canada’s food prices expected to rise up by 7% in 2022: report – Dec 9, 2021

It will be “a tough year for people in the middle class and obviously families with less means as well,” says Sylvain Charlebois, lead author and director of the Agri-Food Analytics Lab at Dalhousie University.

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A family of four will spend up to $14,767 a year on food, an increase of up to $966 compared to 2021. The estimate is based solely on the expected cost of groceries and does not include restaurant meals.

Households who rely on online grocery platforms and delivery services can expect to pay between two and eight per cent more, the report says.

Read more: Why Canada’s food inflation may get worse before it gets better

Click to play video: '4 out of 5 Canadians concerned about rising inflation costs: Ipsos poll' 4 out of 5 Canadians concerned about rising inflation costs: Ipsos poll
4 out of 5 Canadians concerned about rising inflation costs: Ipsos poll – Nov 24, 2021

The prediction of further food price increases comes as Canadians are already grappling with rapidly climbing grocery bills. Canada’s official rate of food inflation, measured by Statistics Canada, reached 3.8 per cent in October.

But high energy prices, labour shortages, supply chain snarls and the impact of adverse weather events linked to climate change will result in even steeper price increases in the coming year for many categories, according to the report.

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Read more: Bigger inventories, blockchain and domestic suppliers: how companies are re-jigging supply chains

Canada’s carbon tax, which is set to increase from $40 per tonne in 2021 to $170 per tonne by 2030, is another factor that will drive food transport costs higher, the researchers noted.

However, “it remains unclear what the effect of the carbon tax on food prices will be and more data are needed,” they said.

Click to play video: 'Canada’s annual inflation rate soars 4.7 per cent in October' Canada’s annual inflation rate soars 4.7 per cent in October
Canada’s annual inflation rate soars 4.7 per cent in October – Nov 18, 2021

Pricier restaurant meals, dairy, vegetables and bakery products

Canadians can expect menu prices to rise between six and eight per cent next year, as restaurants continue to struggle with rising input costs and a hiring crisis, the report notes.

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When it comes to dairy products, which are also expected to climb between six and eight per cent, the report’s projections reflect a recent announcement by the Canadian Dairy Commission, which recommended price increases after finding that production costs were exceeding farm revenues.

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Freeland tells Conservatives to ‘read a book or two’ in debate over inflation – Nov 29, 2021

The commission announced in October it would be raising the price paid to farmers for milk next year by 8.4 per cent, a controversial decision that a Global News investigation showed was based on an unusual method for setting prices.

Read more: Dairy farmers pushed record-breaking price hike for milk even higher

Vegetable prices will likely increase by between five and seven per cent and so will the cost of bakery products, according to the report.

“While bakery has been a non-story since since the end of the price fixing scandal really in 2017, now we’re expecting price to go up because input costs are actually much higher now,” Charlebois says.

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Wheat prices recently reached a nine-year peak amid tightening supplies among the world’s top exporters.

In a small silver lining, though, the report predicts meat price inflation will moderate, with prices growing at most two per cent over the next year.

After two years of increases, “we are expecting a bit of a break at the meat counter for 2022,” Charlebois says.

Click to play video: 'Supply chain disruptions driving up cost of groceries' Supply chain disruptions driving up cost of groceries
Supply chain disruptions driving up cost of groceries – Nov 22, 2021

Canadians get creative as food costs climb

Consumers feeling the pinch of ever-larger grocery bills are finding new strategies to keep costs in check.

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A recent survey by Dalhousie University, for example, found that half of polled respondents had changed their meat-buying habits because of price increases.

And Canadian couponing app Reebee said it has seen a 23-per cent increase in flyer views between October and November. In the past month alone, the company says it has seen more than 100,000 downloads.

The company has seen a significant increase in both user and retailer adoption as food inflation picked up speed, with more and more stores making their coupons available through the app, says Mark Smith, director of retail partnerships at Reebee.

But rising food costs will also worsen food insecurity, the food price report warns, adding that “food programs may face increased demand along with higher costs for food.”

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