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Marginal increases expected for retail food prices in 2014

The latest Food Price Index from the University of Guelph says consumers should expect price increases but they won’t be as high as the past few years


Guelph, Ont. – A new report says consumers may find some relief at the checkout next year.

Researchers at the University of Guelph have issued the latest Food Price Index, an annual report that examines Canadian retail food prices, which also includes restaurant prices.

This year’s report finds that food prices are expected to increase but just marginally next year – compared to the price increases of the last few years.

The researchers say prices for staples such as cheese, eggs, milk and frozen vegetables may even decrease.

One of the researchers, Sylvain Charlebois, a professor and lead author of the Food Price Index, says greater competition is the main reason.

“The Canadian retail market saw very significant changes in 2013,” says Charlebois, who is associate dean of research and graduate studies in Guelph’s College of Management and Economics.

One of those changes was Target. As the U.S. chain arrived in Canada, other retailers such as Walmart and Loblaws kept their prices down.

Driving down food prices

Charlebois says that in last year’s report the researchers predicted that new competition in the Canadian food retail industry would create a price war and eventually drive down food prices.

Charlebois adds that the researchers underestimated what impact competition would have on the market in Canada.

Drugstores, for instance, discount high-demand grocery staples as loss leaders, which then prompts traditional grocery retailers to do the same.

This was a strong trend in 2013 and Charlebois expects it to continue into 2014. “Price points could continue to drop for dairy and pasta products,” adds Charlebois.

The researchers predict general food expenditures to increase by between 0.3 and 2.6 per cent in 2014.

Fish and seafood, on the other hand, are expected to rise more quickly between three and five per cent. This increase is due to demand for healthier and more ethical products, says Charlebois.

For 2014, the report predicts these price changes:

• Meat: up 0.6 to 2.1 per cent;
• Dairy and eggs: down 0.6 to 1.5 per cent, due mostly to increased competition;
• Grains: up 0.2 to 2 per cent;
• Fruit and nuts: up 0.6 to 1.2 per cent; and
• Vegetables: up 1.4 to 2.1 per cent.

Restaurant food prices are expected to increase by no more than two per cent.

Also, as Canadian consumers continue to become more informed about locally grown food and better nutrition, demand will likely increase for premium products such as functional foods, omega-3 eggs and gluten-free items, but intense retail competition should keep prices down, the index says.

The index also predicts that major agricultural industry changes, such as the recent closing of the Heinz plant in Leamington, Ont., and new policies will have insignificant effects on food prices.