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Customers shop at a Metro grocery store in Toronto.Cole Burston/The Canadian Press

Cartons of orange juice are not exactly going to be flying off the shelves in the coming weeks, Metro Inc.’s MRU-T chief executive officer predicts, as a bad orange crop is about to cause a “substantial” spike in price.

And that is just one of the items that will be subject to yet another round of price hikes starting next week, when an annual cost freeze comes to an end, CEO Eric La Flèche said during a news conference on Tuesday.

Product suppliers are continuing to ask for cost increases, though the volume and the size of such requests have been moderating. Metro is expecting most price increases to be in the mid-single-digit percentage range.

“It can be high in certain instances – too high,” Mr. La Flèche said. “So we’re negotiating hard to bring it down … and delaying as much as we can, some of the increases requested by our suppliers.”

While food inflation in Canada has slowed compared with the peaks it reached over the past two years, grocery prices were up 4.7 per cent in December, compared with the previous year. Mr. La Flèche said on Tuesday that he hopes those numbers will fall to a more “normal” level in the 2-to-3-per-cent range.

Metro reported that its food basket inflation was roughly 4 per cent in first quarter, a 12-week period that ended Dec. 23. The company said this was lower than the rate of food inflation measured by Statistics Canada’s Consumer Price Index over the same period in Ontario and Quebec, where Metro operates stores. (Metro’s measure of inflation is based on prices for a basket of goods that are frequently purchased at its stores, and is not directly comparable with CPI.) It was also more moderate than the 5.5-per-cent inflation Metro reported in the previous quarter.

On Tuesday, the Montreal-based retailer reported that its sales rose by 6.5 per cent in the first quarter, to nearly $5-billion.

Grocers have faced intense scrutiny amid inflation. On Monday, federal Industry Minister François-Philippe Champagne sent a letter to the Competition Bureau’s commissioner, expressing disappointment with the level of co-operation from the country’s largest grocers for an industry study the bureau conducted last year. The letter encouraged the commissioner to “take full advantage” of newly enacted powers to investigate the sector.

Mr. La Flèche said Metro “collaborated fully and transparently” in the study, including providing information about the company’s grocery profit margins that was distinct from the margins of the pharmacies Metro owns, such as Jean Coutu.

Food price increases are a global issue: Earlier this month, PepsiCo products were pulled from the shelves at Carrefour grocery stores in France amid a pricing dispute. Metro’s CEO said the company has not reached that point with any suppliers amid a barrage of price-hike requests in the past two years.

“If we want to have access to those products, we are forced to take the cost increase,” he said. “When I say there’s some tension in certain cases, that’s what I’m trying to describe.”

Champagne says he’s working phones to court new players for Canadian grocery market

The Canadian industry has been working on a code of conduct that would govern relationships between grocers and their suppliers. But in recent months, two of the country’s largest retailers, Loblaw Cos. Ltd. L-T and Walmart Canada WMT-N, have objected to the code in its current form. Mr. La Flèche said Metro is “committed” to signing the code, but not without other major players also agreeing to participate.

Canadians who have been severely affected by the increase in food prices in recent years have been shopping more often at discount stores, buying store-brand products, and seeking out promotions and markdowns. Metro’s sales growth in the quarter was mostly driven by the company’s 247 discount grocery stores, which operate under the Food Basics and Super C banners.

On Tuesday, Metro also announced a 10.7-per-cent increase to its quarterly dividend paid to shareholders, to 33.5 cents per share.

Same-store sales – an industry metric that tracks sales growth not generated by new store openings – were up 6.1 per cent at Metro’s grocery stores and 3.9 per cent at pharmacies. The quarter fell closer to Christmas than the same period in 2022, when the first quarter ended on Dec. 17. Accounting for that shift, the company said that same-store sales growth at its grocery stores was 3.4 per cent.

Metro’s net earnings fell by 1.1 per cent to $228.5-million. Earnings per share grew slightly to 99 cents per share in the quarter, compared with 97 cents per share in the same quarter the previous year, when the company had more shares outstanding.

In November, Metro executives signalled that this fiscal year would be challenging as the company is making investments in improving its supply chain operations. The company has predicted that adjusted net earnings per share this year will be within a range of flat-to-down by 10 cents per share.

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