Loblaw’s three-month-long “price freeze” on its No Name products ended Tuesday as one of its main rivals warns cost increases are coming to store shelves.
The move drew praise from Finance Minister Chrystia Freeland at the time, who called it a “great decision.” NDP Leader Jagmeet Singh, who has said “greedflation” has been behind higher grocery bills, called Loblaw’s price freeze at the time a “positive step” but said the grocer “could have acted a lot sooner.”
However, while overall inflation appears to be on the decline, the scrapping of the price freeze comes at a time when Canadian food prices are still higher than overall inflation, according to Statistics Canada’s December 2022 report.
“During the price freeze, Canadians who chose No Name over the big-name brands saved hundreds of millions of dollars. In the meantime, food inflation has continued and the cost to stock our shelves has gone up, month after month,” a Loblaw spokesperson told Global News in an email on Monday.
“The more than three-month price freeze ends Jan. 31 — but we’re not done. Looking ahead, we’ll continue to hold those prices flat wherever possible, and switching to No Name will still save the average family thousands this year.”
The spokesperson did not respond to Global News’ follow-up questions by deadline on whether the price freeze could be extended again.
At the time of the price freeze’s announcement, Metro, one Loblaw’s main rivals, said it was not uncommon for grocers to hold prices during the holiday season. In turn, Metro said it would not accept cost increases from its suppliers over the holidays for its private-label brands and national brand products between November 2022 and Feb. 5, 2023.
Metro CEO Eric La Fleche said in a Jan. 24 earnings call that the grocer has been getting a “significant number” of cost-increase demands from its vendors, and price changes will be coming.
“We have had good conversations with our vendors to manage it, to mitigate and to control the rate of increases because we want to protect those customers and protect the pricing at retail — but there are increases coming,” he said.
“The root causes of worldwide food inflation are still there, and we’re going to have to accept some of these increases. Hopefully we will manage to mitigate it as best we can. There is more of that ahead, while we will remain competitive in a very competitive marketplace.”
In its December 2022 report, StatCan said the annual rate of inflation slowed to 6.3 per cent in December from 6.8 per cent in November. It was the biggest drop in inflation on a monthly basis since April 2020. However, inflation still remains well above the Bank of Canada’s target rate of two per cent.
The price of food from the grocery store was up 11 per cent in the month, cooling slightly from 11.4 per cent compared with the month prior.
While StatCan reported slower price growth among staples such as bakery products (up 13.5 per cent vs. 15.5 per cent in November) and coffees and teas (up 13.2 per cent vs. 16.8 per cent in November), the agency said December saw continued pressure on fresh vegetables, with prices rising 13.6 per cent last month compared with 11.7 per cent in November.
Tomatoes cost 21.9 per cent more in December, year over year. StatCan blamed bad weather in growing regions for the spike.
Canada’s big grocers have come under fire for months as many chains have continued to post strong profits while consumers deal with high prices amid persistent inflation.
The Bank of Canada, which raised its key interest rate seven times last year in a bid to cool inflation, did so again last week, but signalled a pause in rate hikes was coming.
However, that hold is “conditional” on whether the economy continues to develop according to its forecast, governor Tiff Macklem said Jan. 25.
Canada’s economy grew at a rate of 0.1 per cent in November, StatCan said Tuesday.
The Bank of Canada said on Jan. 25 that it expects inflation to “decline significantly” in the months to come, reaching three per cent by mid-2023 before hitting its two per cent target next year.
Canadians will find out what inflation was like in January when StatCan releases its report for the month on Feb. 21.
— with files from Global News’ Craig Lord and The Canadian Press