Food In Canada


Several factors to keep food prices in check in 2012

Researchers say anticipated food price increases are expected to be more modest due to factors such as the economy, climate and competition

Guelph, Ont. – Economists at the University of Guelph predict Canadian consumers will get a break when they cash out at the supermarket in 2012.

Professors Sylvain Charlebois and Francis Tapon say food prices will likely only increase marginally in the coming year, especially compared to 2011.

What to expect

The economists predict that general food prices will increase by no more than two per cent on average. They expect an increase in:
• meat prices of about three per cent;
• fresh vegetables of about one to three per cent;
• baked goods of about three per cent; and
• restaurant meals of about two per cent.

The anticipated price increases are much more modest than those experienced this year. In 2011, dairy and eggs prices went up 11 per cent; fresh vegetables, 10 per cent; baked goods, seven per cent; fresh fruit, six per cent; and meat, five per cent.

The U of G professors had predicted an overall increase of about five to seven per cent for this past year.

Factors affecting the industry

The researchers say that competition in Canadian food retailing, especially with Target arriving in Canada, will help to keep food prices down in 2012.

They also note that consumers have been buying foods more tactically, eating out less and limiting purchases of premium food products such as organically grown and fair trade.

This pattern is expected to continue in 2012.

The economists base their predictions on factors including climate, economic risks, energy costs, currencies and trade, and Canada’s food distribution and retail landscape. They also consider domestic fundamentals such as consumer debt and inflation.

Of these, the economy and climate are the most concerning.

“We cannot remember a period with so much uncertainty in economic outlook and no obvious easy way out,” says Tapon. “Food prices will reflect this uncertainty.”

Also, European financial instability will continue to affect both retail food prices in Canada and import prices for Canadian food importers.

Climate, say the researchers, is the most unpredictable economic driver of food prices.

“It’s an important factor,” says Charlebois, an expert in food distribution and safety. “Every year, the global agricultural economy witnesses the impact of climate change. Productivity and yields are affected by weather constantly, whether regional or beyond.”