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Customers shop at a grocery store in Toronto in this file photo. Food inflation overall is expected to rise between 1 and 3 per cent next year.The Globe and Mail

Canadians are eating out more and can expect to pay extra to do so in 2018, suggests a forward-looking report into food prices.

Food inflation overall is expected to rise between 1 and 3 per cent next year, says Canada's Food Price Report, which was crafted jointly for the first time by researchers at Dalhousie University and the University of Guelph.

For an average family of four, that represents an increase of $348 to about $11,948 for the year.

About 59 per cent of the expected hike – $208 – will come from consumers eating out and opting for prepared food.

"Most of (the increase) will come from food service which would make some consumers a bit vulnerable – particularly those who don't cook or (who) eat out a lot," lead researcher Sylvain Charlebois said in an interview from Halifax.

"But if you are cooking and you rely mainly on grocery stores to get your food, you should be in good shape for 2018."

Restaurant and store owners recognize the demand for eating out and ready-to-eat products is a robust one. In the United States, the divide between grocery expenditures and those types of eating out reached a 50-50 split in 2016.

Charlebois said a fast-food culture has been successfully cultivated over the past 50 years in the United States, but Canada could reach that split by 2035 at its current pace.

Canadians now spend about 30 per cent of their food budget on eating out and consuming prepared meals.

The report suggests different parts of the country will feel different impacts at the checkout line next year.

Atlantic Canada is expected to see above average increases – with prices bouncing back after consumers in the region enjoyed lower prices in 2017.

British Columbia too is expected see increases, due to inflation.

But increased competition in Alberta and Ontario means consumers will see below average price hikes, while Quebec, Manitoba and Saskatchewan are expected to remain steady.

The cost of dairy, baked goods, meats and seafood is expected to rise by up to two per cent, while fruits and nuts are forecast to rise by one to three per cent.

The other category where consumers are expected to pay significantly more is vegetables – as much as four to six per cent extra because of climate woes like the La Nina weather phenomenon, bringing drought conditions to the United States.

Health Canada expects to unveil a new Canada Food Guide in 2018, which the department hopes will change the way people eat over the longer term as a shift toward plant-based diets continues.

A dramatic policy shift isn't expected to have much impact in the short term, Charlebois said.

Another issue is where people buy food – the so-called Amazon effect as food sales move online has grocers trying to change their pricing strategies and approach.

Charlebois said that in an effort to compete, grocery chains are looking at online delivery, embracing more responsive business models and using data science.

Researchers found that pricing discounts intensified around September 2016, which has made food prices more difficult to predict.

"Grocers are trying to compete, they are discounting aggressively to keep consumers in their stores," Charlebois said. "That will come to an end at some point, but we're not sure if that'll happen in 2018."

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