Grocery Prices In Canada Very High

Statistics Canada has released its latest economic indicators report. In September the country’s overall inflation rate was just under 7%, a near repeat of the August report. But Canadian food costs continue to rise. Prices in grocery stores rose to about 11.5%, a new 41-year high for Canada.

In response to continued food price increases, Loblaws, Canada’s largest national retail grocery chain, recently announced an immediate three-month price freeze on its house-brand No-Name products.  The brand has been a Loblaws’ mainstay for more than 40 years.  The price freeze, in place until the end of January, impacts about 1,500 food and home staple products.  But that number reflects less than 10% of Loblaws total retail inventory.

Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University in Halifax, tracks food related economic trends within the Canadian agribusiness industry, and globally.  Charlebois thinks the price freeze on No Name products is a good move, but he says Loblaws should have done it sooner. He said that Canada’s lack of strong sector competition probably played a role in the foot dragging.

“Much as I think that Loblaw’s campaign is a good move, it’s late. We’ve seen grocers around the world do the same thing for seven or eight months now.  You do wonder why it took so long. Industry consolidation is not helping.  Three major transactions led to the state of our industry.  The 1998 acquisition of Provigo by Loblaw, A&P by Metro in 2005, and Sobey’s acquiring Safeway in 2013.  Those three main transactions have led to more power given to fewer people.  So, it is a problem.”

The Loblaws No Name brand is on a wide range of home essentials including apples, potatoes, butter, eggs, cheese, pasta, toilet paper and paper towels.  Charlebois said the No Name line price-freeze was very much a strategic move by Loblaws, as No Name is their price-point brand.

“For Loblaws, the No Name brand is a safe place to go when it comes to freezing prices. No Name is decent quality at a very low price. And right now the market environment is very much about trading down, or trading sideways. And that fits the No Name brand.”
He agreed that the Loblaws move is largely public relations oriented.  But Charlebois also thinks that grocery stores tend to be an easy target for criticism because they present the final price to consumers when costs go higher across an entire value chain.

“Grocers are used to being the target. It boils down to image. And, it’s like going to a restaurant, and blaming the server for a bad dish. The actual problem is in the kitchen.”

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