Go to the Globe and Mail homepage

Jump to main navigationJump to main content

A Nunavut MLA says that since Ottawa changed the Northern Food Subsidy Program, prices have all changed. (Ron Elliott for The Globe and Mail/Ron Elliott for The Globe and Mail)
A Nunavut MLA says that since Ottawa changed the Northern Food Subsidy Program, prices have all changed. (Ron Elliott for The Globe and Mail/Ron Elliott for The Globe and Mail)

Economy

The emptier Canadian refrigerator is coming Add to ...

Global food prices rose to their second consecutive record high last month, so surely some of the outsized pain that helped fuel social unrest across northern Africa and the Middle East started to hit here, too, right?

Actually, probably not. Or, at least not yet.

Statistics Canada publishes February inflation data this Friday, and while every shopper can see that food costs are on the rise, the increases are still contained enough that how much you notice depends on what you're buying.

More related to this story

First, the lofty Canadian dollar is keeping a lid on import prices, including those for some items used in food processing. Even if the loonie weren't helping to contain price gains, grocery store chains' need to avoid falling a step behind Wal-Mart would be.

Much like gasoline, many food staples (think corn, sugar and wheat) have few if any substitutes, so when prices swing because of bad weather or geopolitical tensions halfway around the world, consumers are forced to suck it up and pay a premium. But that means they then cut back on everything else, including "end-product" food items.

Since most of those have reasonable substitutes, grocers know that in a still-somewhat-fragile recovery, raising prices is risky. But, like all manufacturers, the ability of food producers to absorb higher costs for raw materials without passing those down the chain has limits.

That's why economists say that over the next few months, Canadians' food costs will gradually rise, with the average family paying up to 7 per cent more for groceries by the end of the year. Of course, for most people the effect of that increase won't even compare to the misery that higher food costs are causing in poorer countries, where so much more of household income goes toward basic necessities.

Nevertheless, price gains are already in the works.

Baked goods giant George Weston Ltd. announced earlier this month that it plans to raise prices by an average of 5 per cent starting April 1, and Metro Inc., Sobeys Inc. and Loblaw Cos. Ltd. have all hinted they can no longer afford to subsidize Canadians' grocery bills and will soon need to raise prices.

Increases will probably be slow, thanks to the competitive pressures noted above. And some analysts say they'll be short-lived, because much of the higher cost of food production is being driven by high energy costs, which may not last if the chaos in Libya doesn't spread to other oil-producing states.

But others warn that increasing world demand - as the global population grows, and as rising incomes in emerging markets mean more people can eat such things as meat and dairy - coupled with diminishing supply could cause prices to soar ever higher, hitting families across the globe.

Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc., says past patterns suggest that grocery price gains lag surges in commodity prices by about nine months to a year.

So, sooner or later, as grocers' suppliers charge more, you and I will pay more at the checkout counter.

Follow on Twitter: @jeremytorobin

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories