Grocery shopping is your weekly inflationary gut-punch.
You have some manoeuvring room with rising prices for vehicles, furniture and houses, all of which were contributors to the 4.1 per cent inflationary jump in August compared with a year earlier. But food inflation, pegged at close to 5 per cent in a new report by Dalhousie University’s Agri-Food Analytics Lab, gets crammed down your throat. Get used to it.
“We don’t expect 2022 to be as rocky as 2021, but there are clearly some lingering issues,” said Sylvain Charlebois, director of the lab. “Labour costs, climate change, logistics – these challenges won’t disappear very soon.”
The report uses data from a survey of 10,005 people over the summer to document the extent of food inflation and the ways people are coping. Prof. Charlebois said 5 per cent food inflation means an extra $700 in yearly grocery costs for a family of four, including two adults and two children between 11 and 15 years old.
A total of 86 per cent of people surveyed believe that food costs are higher than they were six months ago, but boomers and Gen Xers are noticing it more than millennials and Gen Z. Meat is by far the biggest concern – almost 52 per cent of survey participants cited it as the food category that has increased the most in price in the past six months, compared with 15.7 per cent for groceries such as processed food, 10.5 per cent for vegetables and 9.1 per cent for fruits.
The report says almost half of people have bought less meat over the past six months because of higher prices. Roughly four in 10 said they’re using weekly flyers and coupons more, and buying discounted food closer to the best before/expiry date.
For example, Prof. Charlebois said you can save as much as 25 per cent to 50 per cent by buying “enjoy tonight” meat, which is right up against its best-before date. “The freshness might not be as good, but you can save quite a bit of money.”
Some untapped potential for saving money on food is to use mobile phone apps to check competitive pricing while in the grocery store. Only 22 per cent of people said they did that in the survey done for the Dalhousie report. Apps such as Flipp and SaleWhale aggregate weekly flyers from local retailers and will show you deals for items on your shopping list.
Rising labour costs are a big driver of food inflation, Prof. Charlebois said. Like many sectors in the economy, food producers must offer higher wages to attract and hold workers in a pandemic economy where people feel freer than ever before to leave jobs that don’t suit them. The Quebec-based meat processor Olymel recently reached a six-year deal with workers at one of its plants that provides a 26.4 per cent total wage increase, with 10 per cent in the first year. The agreement also includes a lump-sum payment of $65 per year of service.
Prof. Charlebois said the pandemic is also responsible for logistical snarls that have slowed shipments of goods from other countries and in turn raised prices for Canadian consumers. Climate change has had an impact on food production and pricing through drought conditions this summer in North America and flooding in Europe.
Some random examples of food inflation mentioned by Prof. Charlebois:
- Butter: Prices are up 35 per cent in the aftermath of a surge in demand in the pandemic and a controversy over practices used by dairy producers that resulted in a harder consistency of butter.
- Peanut butter: “Peanut butter has been pretty much the same price for the past 20 years, and now it’s up 3 per cent,” he said.
- Ketchup: Up 7.8 per cent in a competitive category.
- Chicken: Up 10 per cent.
- Restaurants: Prices are expected to rise 6 per cent over next six to 12 months, while the number of menu items is reduced.
One of the most in-your-face aspects of rising food prices is shrinkflation – similar pricing for a product, but in a smaller package. Prof. Charlebois said shrinkflation adds to our food bills because we get less for our money, but there may also be an upside.
“We know that consumers tend to get upset about shrinkflation, but many experts have argued that we generate more waste as consumers because we buy too much food,” he said. “Shrinkflation will help us buy less food, so you could argue that perhaps it will help consumers waste less.”
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Rob Carrick