Canada

Guest Column: Food inflation avoids the worst

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Statistics Canada reminds Canadians every month how painful it is to go to the grocery store these days.

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Retail inflation remains at a staggering 9.9%, the highest since 1981.

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Claims of “greedflation” are rampant, blaming the industry for preying on consumers stressed by the ever-increasing cost of living.

However, as we enter the fall season, there are signs that things are improving and that calm seas are on our doorstep.

Food inflation is often about context. In July 1978, inflation was 9.4% for him, but food prices were rising 20.2% year on year. This is the biggest difference we’ve seen in the last 50 years. Things were out of control.

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Our current situation is a far cry from 1978. In the United States, grocery store food inflation is currently over 13%. Her July food inflation rate in the UK was 12.7%, again well ahead of Canada.

The good news is that our food inflation appears to have peaked – or at least it is under control for now. inflation has yet to reach 10%.

The biggest monthly jump this year was indeed 1.4% in January. This was his best monthly jump since 2016. In June it was 0.1%. However, July saw an increase of 0.9%.

However, since 2011, there have been 12 total monthly increases above 0.9%. The bottom line is that the numbers show that extreme volatility affecting food prices could be behind us.

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The impact on commodity prices of Russia’s invasion of Ukraine, which sparked a new inflationary cycle, has now been largely absorbed by the food supply chain. Commodity prices he peaked on May 17 and then dropped significantly.

Supply chains are also dealing with more predictable situations related to the COVID-19 protocol. COVID-related rules and conditions are far more predictable as governments continue to keep people safe, which is really helping the food industry, both service and retail.

As consumers, we should expect more rebates, discounted products and loss leaders. Successive lockdowns have taken their toll and made life a nightmare for many in the food industry.

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However, there are still some issues with grocery stores.

The first is dairy products. The Canadian Dairy Commission has recommended his second tax increase of an unprecedented 2.5% starting September 1st. Great for farmers, but retail prices in the dairy sector are skyrocketing.

Liquid milk prices have increased by about 25% since February, according to BetterCart Analytics. Yogurt, cheese, sour cream and ice cream all saw him rise significantly since February and are expected to surge again in the coming weeks as children return to school.

This shows where the market is heading. Dairy farmers want more money, but what appears to be undervalued is that they will lose more farms due to poor demand for more expensive dairy products. That’s it.

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Bakery items are another category that is seeing rising prices. For many years, bakery products were a no-brainer. Processing was more integrated this year, and prices were expected to be higher.

The correlation between commodity prices and retail prices is usually weak, but market conditions due to grain shortages this year have made access to some raw materials difficult.

If the current inflation cycle is a baseball game, we are in the 7th inning stretch.

Markets are also tightening last week, with grocery store sales down 3% from January, Statistics Canada said. More consumers flock to non-traditional grocery stores like Walmart and Costco, and even his 100-yen shop.

The days of people flocking to the grocery store in the early days of a pandemic are long gone. Food sales are more profitable than ever.

Sylvain Charlebois is Professor and Senior Director of the Agro-Food Analysis Lab at Dalhousie University.

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Guest Column: Food inflation avoids the worst

Source link Guest Column: Food inflation avoids the worst

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