Food prices in Canada forecast to rise at highest rate in more than a decade

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Food prices will rise as much as 7 per cent over the next year – the highest increase in more than a decade, according to a new report.

As a result, the average family of four will pay $966 more for food in 2022 – after a 4-per-cent hike this year and amid record-high general inflation.

“In 2022, food insecurity will be a big issue as Canadians grapple with rising prices,” warns Canada’s Food Price Report, compiled by researchers from Dalhousie University, the University of Guelph, the University of Saskatchewan and the University of British Columbia.

“Food programs may face increased demand along with higher costs for food, and food retailers may see increased rates of theft.”

The 2022 price hike is the highest ever predicted in the annual report, now in its 12th year. Climate change, higher costs for energy and the pandemic are all cited as reasons behind the price increases.

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Transportation complications – including supply chain disruptions and climate change-related weather events such as the floods in British Columbia – are only likely to worsen over the next year, said Sylvain Charlebois, the report’s lead author and a professor of food distribution and policy at the Agri-Food Analytics Lab at Dalhousie University.

“Things are coming through, things are being delivered,” he said. “But it’s taking more time. And when things take more time, it ends up costing more.”

Higher labour costs, too, will drive up food prices, said Simon Somogyi, the Arrell chair in the business of food at the University of Guelph and another of the report’s authors. He pointed to factors such as recent COVID-19 outbreaks at meat-processing plants, new physical distancing and safety measures at workplaces and increased wages overall.

These higher costs will likely hit restaurants particularly hard, he said. “They’re seeing the compound effect of higher food prices and they have to absorb those. And their labour costs are getting higher and higher,” he said.

“And all those costs have to be put into menu prices.”

The report singled out dairy. In late October, the Canadian Dairy Commission, citing higher feed, energy and fertilizer costs, announced that it would be increasing farm gate milk prices by 8.4 per cent.

But one bright spot, according to the researchers, will be the cost of meat, which has skyrocketed this year. Those prices are likely to stabilize over the next year, according to the report, rising between 0 and 2 per cent.

The price increases will disproportionately affect certain vulnerable communities. “We’re in high inflationary times,” said Prof. Somogyi. “But our wages aren’t increasing at the same level. This particularly impacts people on lower income – women, Indigenous populations and people of colour.”

Food banks across Canada already saw a jump in visits last year – 20 per cent over 2019, said Richard Matern, the director of research at Food Banks Canada. Part of that was owing to already-high food costs, he said.

“We found a combination of reasons,” he said. “Food inflation, low incomes – which were the result of either pandemic-related job losses or stagnant benefits from their current supports – and then housing costs.”

He said food banks are hit twice by inflation: There’s an increase in demand, and of course there’s the higher cost of food. At most food banks, about 25 per cent of what they give out is purchased, with organizations spending, on average, about $200,000 each year on food, he said.

“We’re concerned about this ongoing wave of need that’s going to be getting more persistent,” Mr. Matern said. “We’re concerned things will continue to get worse.”

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