Who's to blame for staggeringly high food prices in Canada? According to the top brass at the country's three biggest grocery chains, it's not them—it's everyone else!
Catch up: CEOs of Canada's three largest grocery retailers defended themselves against accusations of "greedflation" and pushing prices higher for the sake of profits during a parliamentary committee meeting in Ottawa last week.
- The execs cited increases in non-food-related sales and supplier costs as a driver of profits.
Why it happened: Loblaw, Metro and Sobey's saw a combined $2 billion in profits in 2022. All three beat their five-year averages for profits in the first half of the year, and the CEOs took home hefty bonuses, with some earning a 10% increase.
- Meanwhile, Canadian consumers still suffer from sticker shock while browsing store shelves, as food inflation rose 10.4% in January.
Yes, but: It’s difficult to separate truth from fiction when it comes to grocery inflation, largely because grocery companies don’t separate the profits they earn from selling food from other lines of business (like their pharmacies).
Why it matters: Canadians spent 11% of their disposable income on food in 2022, and it’s one of the few areas where inflation doesn’t show much sign of easing.
- Food prices are also not very sensitive to higher interest rates because people have to keep buying food even if their mortgage payments or credit card bills go up.
- That leaves a lot of question marks around how exactly food inflation is going to be brought under control, and the latest round of Parliamentary hearings didn’t do much to clarify that.
Dig deeper: Trevor Tombe breaks down everything you need to know about inflation, including what’s driving food prices higher, on this episode of The Peak’s Free Lunch podcast.