Economists say there are a number of factors driving up food prices, but they expect food inflation to slow over time. Here's a look at what’s behind Canada’s high grocery prices and what to expect in the coming months.
TLDR; climate change, Russia, supply chain not recovered, labor shortages; more price increases expected :/
With extreme weather events like droughts, wildfires and flooding becoming more frequent in Canada and around the world, as a result of climate change, Fan said farm production and supply chains are impacted, applying some pressure on overall food inflation.
Extreme weather is one of the major threats that RBC has identified for food inflation for the upcoming decade, Fan noted, because it will likely lead to “a lot more volatility and uncertainty.”
Russia’s invasion of Ukraine in February 2022 resulted in additional upward pressure on global food prices due to the role the two countries play in agricultural and oil production.
In Canada, five retailers — Loblaw, Sobeys, Metro, Walmart and Costco — control an estimated 80 per cent of the grocery market share, according to a 2021 study from the federal government.
“It takes all these things to start to normalize — the supply chain, which it did since late 2021, wage growth in Canada is still kind of elevated at the moment, … the impact on commodity prices from the Russian invasion to Ukraine.”
“My best assessment is that things will get a little bit better than they are based off of conditions that they are at the moment and so they’ll slow down, which will be nice, quite frankly, because there’s a lot of people who are remarkably angry about prices that have sort of risen in the last few months,” he said.
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This is the best summary I could come up with:
With extreme weather events like droughts, wildfires and flooding becoming more frequent in Canada and around the world, as a result of climate change, Fan said farm production and supply chains are impacted, applying some pressure on overall food inflation.
Extreme weather is one of the major threats that RBC has identified for food inflation for the upcoming decade, Fan noted, because it will likely lead to “a lot more volatility and uncertainty.”
Russia’s invasion of Ukraine in February 2022 resulted in additional upward pressure on global food prices due to the role the two countries play in agricultural and oil production.
In Canada, five retailers — Loblaw, Sobeys, Metro, Walmart and Costco — control an estimated 80 per cent of the grocery market share, according to a 2021 study from the federal government.
“It takes all these things to start to normalize — the supply chain, which it did since late 2021, wage growth in Canada is still kind of elevated at the moment, … the impact on commodity prices from the Russian invasion to Ukraine.”
“My best assessment is that things will get a little bit better than they are based off of conditions that they are at the moment and so they’ll slow down, which will be nice, quite frankly, because there’s a lot of people who are remarkably angry about prices that have sort of risen in the last few months,” he said.
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