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Is your family grocery bill soaring? Add to ...

Does it seem as if you are spending more and more on groceries but getting less and less?

It's a complaint that's come out of my husband's mouth a lot lately, and very likely many Canadians are feeling the same frustration. Food prices have risen from where they were five years ago -- even one year ago -- while few of us are making more money to compensate for it.

To illustrate, Statistics Canada reported that food prices rose 4.3 per cent in the 12 months ending in September, while the average salary increased by 3 per cent in 2011, according to the Conference Board of Canada. Clearly, food price hikes are outpacing wage increases. Add to that our substantial personal debt load, and you've got a recipe for some serious belt-tightening.

Food Banks Canada did a survey that showed Canadians are using food banks at a rate that's still 26 per cent above pre-recession levels. As Katherine Schmidt, executive director of the association told the Globe on November 1st: "We think we’re coming out of a recession, but this is telling us that many Canadians are still really struggling."

A look at the average retail prices for food as recorded in this Statistics Canada database, shows that of the 50 or so food items they track, virtually every item has gone up from five years ago. Canned sockeye salmon was the sole exception.

Here's a sampling of some the price differences and note that some of the most basic staples, like flour, beef, chicken, pototoes, bread and coffee, made the biggest jumps in price.



In addition to these telling numbers (can you believe the hike in ground beef?), it's interesting to note that several of the food items - like steak, potatoes and coffee - made their biggest jumps in the last twelve months, some going up by a dollar in one year.

But is this constant upward momentum going to continue indefinitely? Michael Burt, the Associate Director of Industry Sector Economics at the Conference Board of Canada, says food prices might change course and start to fall by early 2012.

“It takes six to 12 months for changes in agriculture prices to show up on store shelves, so consumers don't see the price changes right away,” says Mr. Burt. “What has actually happened in the last six months or so is that prices for some commodities have started to edge down actually, so things like wheat, corn, some types of meat, sugar prices are lower today [on agricultural markets] than they were six months ago.”

As an example, high prices for wheat had been driven by 2010's poor harvest in Canada (due to droughts, fires and flooding). Mr. Burt says that all indications suggest 2011 is going to be a pretty good year for production, so stocks are being built back up. “I think what we might see leading into the new year is a drop in prices for some products,” he says.

But don't expect the cheaper days of the 2000s anytime soon.

“Prices are edging down from the highs they were at six months ago, but they're still elevated compared to what you would consider historic norms,” says Mr. Burt. “We don't think we'll necessarily see another big spike like we did at the beginning of this year and in 2010, but we don't think we'll be going back to prices from five years ago.”

Today's high prices are driven by a number of different factors, including higher fuel prices (which drive up the cost of food transportation) and the growth of bio-fuels. As Mr. Burt puts it: “If they're planting more corn [for the bio-fuel market], they're planting less wheat, less soybeans.”

As well, global demand for food is on the rise in places like China where both populations and incomes are increasing.

“Populations are growing, so you have more mouths to feed and people's incomes are growing, so they can afford more food,” he says. “A country like China or India, there would have been a staple crop diet, like grains, but they are able to afford and are demanding a wider palate, and that's creating demand pressures.”

The message seems clear to me. Look for food prices to dip as we enter 2012. And when that happens, stock up while you can.

 

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