Here’s how Ottawa could tackle food inflation — and when you can expect it to ease

Measures to rein in food inflation such as removing “best before” labels and standardizing packaging sizes to address so-called shrinkflation could help limit the impact on Canadians’ pocketbooks, according to a Parliamentary report released Tuesday.

The report from the Standing Committee on Agriculture and Agri-Food looks at what drove price acceleration at the grocery store to decades-high levels over the past year but stops short of laying blame on grocers themselves, deferring to the results of an upcoming Competition Bureau report into concentration in the grocery sector.

The committee, which heard from dozens of academics and industry representatives over the course of its meetings between December and April, laid out a series of recommendations to tamp down food inflation.

One of the proposals is to look at the impact of removing “best-before” dates as a strategy to reduce food waste. The committee proposed extending the implementation timeline for the single-use plastics ban for some grocers to make sure their packaging is suited to extending food’s shelf life.

“Best-before dates are wildly misunderstood. They are not expiry dates. They refer to a product’s peak freshness,” the CEO of Second Harvest Canada is quoted as stating in the committee report. “Eliminating best-before dates would prevent safe, consumable food from being thrown out and save Canadians money on their grocery bills.”

Best-before dates can play a role in how Canadians respond to food inflation as they gravitate towards “enjoy tonight” meals, says Yang Yang, an assistant professor of food economics at the Johnson Shoyama Graduate School of Public Policy, University of Saskatchewan.

“Removing the best-before dates is more about how consumers accommodate food inflation and how they adjusted their behaviour to actually reduce the impact of food inflation,” she tells Global News.

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In response to concerns about so-called shrinkflation — when producers keep prices steady but reduce the size of the product’s packaging — the committee also recommends adopting a standardized approach for unit pricing to help Canadians make “informed decisions” at the grocery store.

Other recommendations in the report include adopting a grocer code of conduct and initiatives to help producers access reliable labour and speed up automation efforts. Many of the proposals would be implemented via partnerships with provinces and territories, according to the report.

The agriculture committee’s probe into food inflation was spurred, in part, by accusations that grocers were seeing profits soar alongside decades-high levels of inflation because of price-gouging or “greedflation” this past fall.

Grocers have pointed to increased costs from their suppliers as driving the higher prices facing consumers in their aisles and have denied accusations of profiteering.

“Reasonable profitability is an important part of operating a successful business,” said Galen G. Weston, CEO of Loblaw parent company George Weston Ltd., in testimony to the agriculture committee in March.

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While the committee ultimately defers to the results of the Competition Bureau’s study, it says that if proof of price-gouging emerges, a windfall tax ought to be implemented on grocery giants to deter such price hikes.

The committee notes that investigations into possible profiteering from Canada’s biggest grocers are limited by a lack of transparency in the companies’ financial disclosures. Profit margins on food sales are often blended with earnings from other aisles of the grocery store, such as pharmacy and cosmetic sales, which some grocers including Loblaw Co. Ltd. have highlighted as driving their profit sales over the past year.

The report proposes new powers for the Competition Bureau to compel relevant information on margins and the possibility of creating a new permanent commission tasked with overseeing price-setting and profit margins through the food supply chain.

Inflation on food purchased from stores has eased somewhat so far in 2023, clocking in at 9.1 per cent in April, down from highs of 11.4 per cent in November but more than double the overall inflation rate of 4.4 per cent last month.

A report from Royal Bank of Canada released Wednesday shows, however, that the past two years have seen prices at the grocery store rise a cumulative 18 per cent.

That report largely points to external factors from the grocery store driving up prices: Russia’s invasion of Ukraine and other geopolitical events; extreme weather such as droughts curtailing food production; costs for transportation and labour soared globally amid the recovery from the COVID-19 pandemic.

“The good news is that almost every one of these factors has moderated,” reads the report from RBC economists Nathan Janzen and Claire Fan.

While the food supply chain has adapted to recent disruptions, extreme weather events are becoming more frequent, the RBC report states. As such, while food inflation is expected to stabilize in the months ahead, consumers shouldn’t expect prices to drop.

“All told, while we continue to expect lower food inflation in the current economic cycle, we don’t expect food prices to return to pre-pandemic levels,” the RBC report said.

Yang agrees with RBC’s assessment, and says that relief in food inflation does not mean Canadians will start seeing a return to pre-pandemic affordability at the grocery store.

“Food prices are not cheaper, but they’re just going up more slowly,” she says.

— with files from Global News’ Kyle Benning

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