Price changes, especially on necessities, really stand out to us. So many people are struggling to make ends meet right now that this is truer now than ever before. Grocery store and menu prices have all gone up. Since late 2021, global food prices have been going up faster than the overall rate of inflation. While the Consumer Price Index saw year over year an increase of 4.3% in March 2023, grocery prices rose 9.7% in the same time frame.
Supply chain issues, labour issues, consumer behaviour, weather conditions, tariffs, higher costs, and higher wages have all played a large role in increasing food prices. We’re starting to get used to food prices increasing because of these things and are learning to manage accordingly. What we’re not used to is prices increasing so dramatically because of so many of these issues happening at the same time. It’s a twist that many of us were not ready to take on.
War in Ukraine
The war in Ukraine has amplified the already high pressure on grocery prices. Ukraine and Russia stopped their exports of cereal. Nearly 50 countries rely on these two exporters for at least 30% of their cereal imports. For about 20 of these countries, it’s over 50%.
Russia is the top exporter of nitrogen fertilizer. They are second in potassium and third in phosphorus. When the export of fertilizer stopped, the prices skyrocketed, making it unaffordable for many farmers. It’s predicted that there will be smaller harvests for at least the next two years.
- Almost one-third of the world’s wheat and barley come from Russia and Ukraine. They also supply 70% of the world’s sunflower oil and a significant portion of corn.
- Russia is the number one producer of fertilizer.
- Over 20 million tonnes of Ukrainian grain has been prevented from reaching the Middle East, North Africa, and parts of Asia.
- Russia is a major distributor of cod and haddock throughout the world. In March 2022, Canada imposed tariffs on Russian products. The tariff applied to most Russian imports, including fish, causing prices to swell up.
Supply chain issues
Here are a few of the ways the food supply chain has influenced price inflation.
Finding workers has been hard for businesses in the food industry. To entice more workers many grocers increased wages. This then leads to higher prices for products.
Gas and oil prices dropped at the start of the pandemic but increased because of the Ukraine conflict. Energy is relied on heavily in the agriculture and food industries for many activities, like irrigation, farm machinery, packaging, and distribution.
Freight and Distribution Costs
There were some bad luck moments, like the Suez Canal clog in 2021, and a number of big weather issues that caused transport issues.
Grocery store inquiry
Grocery prices have been such a concern and hot topic in Canada that the leaders of three top Canadian grocers were called to appear before a parliamentary committee.
It was all in an effort to get clarity from the industry about why it is experiencing such high profits and yet saying prices are fair. All three grocers went on to say that the profits were from other departments, calling out pharmacy in particular.
The Dalhousie University Agri-Food Analytics Lab found all three beat their five-year average profit in the first half of 2022.
In January, Statistics Canada reported that food prices had risen 11.4%, although headline inflation had appeared to be cooling.
It’s worth noting that, shortly after the inquiry, it was reported that Loblaws CEO, Galen Weston, had taken a multi-million dollar pay raise last year. He ended up resigning from the company.
What’s predicted for 2023
Sadly, according to Dr. Sylvain Charlebois, prices are likely to continue increasing for consumers. The Food Price Report 2023 of Canada forecasts a 5% to 7% rise in food costs in 2023. Vegetables, dairy, and meat will have the highest price increase. The report predicts a family of four will spend around $16,288.41 annually on food. This is an increase of up to $1,065.60 compared to 2022.
Tips for keeping costs low
Here are a few tips on how to save money at the grocery store:
Take advantage of any reward programs offers by your grocery store and credit card issuer.
For example, certain credit cards can give you up to 6% cash back when you buy groceries with them. The cash-back amount can go a long way in saving on your overall costs.
Keep in mind that these cards may include an annual fee, and it’s best to pay your balance in full every month to avoid any extra interest charges.
Using coupons can save you money on food items. Major retailers have apps that enable you to create a free loyalty account and “clip” coupons into it for discounts when you check out.
Check out alternative services to buy produce
Food waste is a huge issue, with a lot of it not being eaten because of cosmetic issues or surplus. Alternative services sell these types of products for a cheaper price than you’ll find in the store. There’s also the option of joining a community shared garden.
Buy from discount stores
These stores can offer lower prices by having a limited selection, stocking generic products and employing fewer staff. You’ll need to bring your own bags and do the bagging yourself, but you could end up saving money.
Consider curbside pickup to prevent overspending
If you have difficulty sticking to your shopping list, curbside pickup could be a way to avoid going over budget. Many of the large retailers offer this option without cost if you order through their app or website.
There are many factors influencing the price of food. We can’t avoid it, but we can work around it. Create a budget and follow these tips provided to help you cut down on your grocery bill.
Has the cost so food led you to go into debt? Struggling to keep on top of payments? Contact one of our professional credit counsellors for support.