Food prices will continue to rise in 2024, with the average family of four expected to pay $700 more for groceries over the next year, according to an annual report on grocery prices.
Canada’s Food Price Report, now in its 14th year, says the cost of groceries will increase between 2.5 per cent and 4.5 per cent in 2024 to $16,297.20 for a family of two parents and two children. It projects that certain items – bakery, meat and vegetables – could rise by up to 7 per cent.
While the report projects that groceries will become more expensive overall, the rate of increase is slowing. Even the higher end of the price-hike projection – 4.5 per cent – is lower than this year’s actual increase of 5.9 per cent.
Prices will once again be pushed up by interest rates, energy costs and climate change. Heightened transportation expenses and geopolitical risk – the wars in Ukraine and the Middle East – will also continue to contribute to higher prices.
But some essential items might actually become cheaper, according to the report, which was published Thursday by Dalhousie University, the University of British Columbia, the University of Guelph and the University of Saskatchewan.
Stuart Smyth, Agri-Food Innovation & Sustainability Enhancement Chair and one of the report’s researchers, said the falling prices of commodities, including wheat, corn and soybeans, could lead to a small drop in the price of some staples.
“We’re also seeing a more consistent supply of products through our supply chain, and uncertainty costs money,” Prof. Smyth said. “I am optimistic that we will be in a little bit more of a stable period now.”
With inflation dropping, grocery chains will have wider margins within which to offer promotions on basics, said Sylvain Charlebois, the lead researcher for the report and director of the Agri-Food Analytics Lab at Dalhousie University.
“It’s going to be a much more manageable year compared to the last two years,” Mr. Charlebois said. “Dried pasta, sauces, canned goods – all those products could be subject to some price wars.”
As of October, grocery prices had risen 18.5 per cent since the beginning of the pandemic in March, 2020, Mr. Charlebois said.
The findings follow a year of intense scrutiny for the grocery sector, which has been under pressure from the federal government to answer for higher profits.
In September, the Liberal Party introduced Bill C-56, which proposes several amendments to the Competition Act to help make groceries more affordable. This includes giving the Competition Bureau more power to conduct market studies, and to terminate deals between rivals that undermine competition.
And in October, Prime Minister Justin Trudeau called on the major grocery chains to stabilize the rise in food prices. The government has since said it only expects the stores to bring price growth in line with overall inflation.
However, the report projects that grocery prices could continue to outpace inflation. In its October Monetary Policy Report, the Bank of Canada projected that inflation would stay around 3.5 per cent until the middle of next year, returning to its 2-per-cent target in 2025.
In 2023, for the first time in the Food Price Report’s history, families spent less on average on groceries than in the proceeding year. Prof. Charlebois says the finding reflects the added pressures families are facing to pay for housing amid higher interest rates and debt levels.
While last year’s report estimated the typical Canadian family of four would spend around $16,300 on groceries in 2023 – the same estimate as this year – in fact they spent just $15,600, either by reducing the quantity or quality of food they are buying or by substituting less expensive alternatives.
The Globe and Mail, December 7, 2023