People shop in a grocery store in Montreal, on Nov. 16, 2022.Graham Hughes/The Canadian Press
A new report from RBC says the cost of filling a grocery cart is finally stabilizing, but don’t expect food prices to go back to pre-pandemic levels.
The report released this week says the main drivers of food inflation, such as global supply chain issues and transportation costs, have eased but prices won’t drop any time soon.
RBC says food prices have soared by 18 per cent over the past two years, adding to the strain on Canadian household budgets amid rising interest rates.
Supply chain bottlenecks, shipping costs and volatile prices of raw food commodities, such as wheat and oils, have stabilized and concerns about the impact of geopolitical strife – mainly the war in Ukraine – have eased.
But RBC warns that drought and other extreme weather events are becoming more frequent and could “meaningfully limit” farm production, which would affect the food supply chain.
The report points to shrinking livestock herd sizes in Canada and the United States as an example, after recent droughts forced some meat producers to sell off or slaughter cattle in large numbers.
The RBC report also says labour shortage issues, exacerbated by an aging population, and wage growth will keep food prices elevated.
The report says Canadians have been paying more for less food since early 2021 and that has lowered demand for pricier food items.