Shoppers looking forward to some relief at the grocery checkout next year will be disappointed: prices are expected to outpace inflation for the second straight year.
Food prices could rise by as much as 2.4 per cent, led by a 5-per-cent increase in meat and seafood, according to the University of Guelph's annual report.
The overall consumer price index is forecast at 1.8 per cent, according to Bloomberg data.
For food, inflationary pressure from flat interest rates and a slump in the Canadian dollar against the U.S. currency will be offset by cheaper energy costs, said Prof. Sylvain Charlebois, one of the report's authors.
The wild card will be weather. The drought in California is expected to persist, driving up prices for imported fruits and vegetables. Canada, mainly Ontario and British Columbia, buys about $5-billion a year in produce from the state, including tomatoes, lettuce and cucumbers.
"Climate change is always a tricky one," he said. "We don't expect the California situation to change. They're talking about a mega-drought."
Meat prices are not expected to repeat the double-digit increases seen this year, when beef prices touched records as ranchers could not increase herd sizes fast enough to meet demand, and a piglet-killing virus arrived from the United States, and bacon and ham prices soared by 25 per cent and 18 per cent, respectively.
The large North American grain crop has dampened livestock feed prices, and should help limit the increase in meat prices next year, Prof. Charlebois said. At the same time, barbecue season is over and after the usual Christmas buying spree, shoppers are expected to spend less on meat and seek more affordable vegetable proteins.
Meat 3% to 5%
Fish & seafood 3% to 5%
Dairy & eggs -1% to 1%
Grains 0.0% to 2%
Fruit & nuts 1% to 3%
Vegetables 3% to 5%
Food-restaurants 1% to 3%
Overall food expenditures +0.3% to +2.4%
Source: University of Guelph, Food Price Report 2015