While at a grocery store in 2021, you may have noticed food prices going up. In some cases, food prices in Canada have doubled. Unfortunately, this trend will continue into 2022. Possibly even longer. In fact, Canada’s Food Price Report claims Canadian families should expect to pay about $1,000 more on food in the upcoming year. You might be wondering, why is this happening? Who will face the burden the most? How does inflation affect food prices? All of the answers related to food inflation are in the article below.
Why are grocery prices increasing?
Grocery prices are increasing because of inflation. Currently, the inflation rate is 4.7 percent. This is the highest inflation rate Canada has seen in years. Normally, annual averages are around 1 percent. When inflation is high, the cost of goods becomes unstable. This includes basic necessities like groceries.
What is food inflation?
Inflation is the decrease in purchasing power of money. In other words, it’s a general increase in the prices of goods and services in an economy. Food inflation is a measurement of inflation specifically on grocery products. In October 2021, food inflation reached 3.8 percent, as measured by Statistics Canada.
Here’s what Canada’s Food Price Report claims
In December 2021, Canada’s Food Price Report released its 12th edition. The lead author is Sylvain Charlebois, the director of the agri-food analytics lab at Dalhousie University.
Below are findings from the report:
|1. Restaurant meals, dairy, vegetables and bakery products will increase between 5 and 8 percent next year in price.|
|2. Fruit and vegetable prices will increase as a result of food inflation too.|
|3. An average family of four will spend about $1,000 more on food in 2022.|
|4. Those who rely on digital grocery platforms and delivery services expect a 2 to 8 percent increase in price.|
|5. Big discounts of 25 to 50 percent will arise on products about to expire, proving food aesthetics cost money.|
The Canada Food Price Report concludes Canadians should expect overall food price increases. This will occur in 2022, perhaps for more years to come.
The grocery price increase will affect middle- and lower-class families
Unstable prices in the economy normally impact middle- and lower-class families the most. This is because their lifestyle can be heavily impacted by a small change in price. Most low to middle-class families have a fixed income. Because income doesn’t always increase when inflation does, higher costs of living can be problematic. In addition, inflation is affecting other basic goods in the economy, such as gas, housing and utilities. Therefore, with all of these prices increasing, middle- and lower-class families may struggle financially in 2022.
How and why did COVID-19 affect grocery prices in Canada?
Inflation in Canada and other parts of the world is happening as an indirect result of the COVID-19 pandemic. For example, ongoing supply chain disruptions, central banks flooding the economy with cash, and surge in demand are factors. Other factors affecting inflation are labour shortages and adverse weather related to climate change impacting food development.
In other words, the pandemic and other global factors have made it more challenging to produce and distribute food products. These input costs are more expensive which relay back to the consumer. As a result, prices are increasing at the point of sale.
How long will higher grocery prices continue?
Unfortunately, these factors of the pandemic will continue into 2022. Perhaps for several years to come. In addition, food inflation is volatile. Rates can swing up or down based on factors like weather.
On top of hectic weather due to climate change, the effects of the pandemic impact food inflation too. Supply chain disruptions cause longer delivery times of food. This is more expensive which reflects in the price a consumer pays for groceries. For these reasons, it’s really difficult to tell how long higher grocery prices will affect Canadians.
Get crafty with food
In 2021 when meat and ground beef prices soared, many Canadians pivoted their dietary preferences. This included more vegetarian and vegan meals to save on food costs. Those looking to challenge the rise in grocery bill prices in 2022 can do the same. Good strategies to implement include cooking at home more often, avoiding dairy products, and buying vegetable and bakery products when prices are low. To save money, get creative with your meals and food choices!
Ongoing inflation is going to impact many Canadians negatively. This is especially true for those with reduced income due to lockdowns or individuals who have lost their jobs. If you’re struggling financially, Consolidated Credit can help. Reach out to one of our experts today!