Your grocery bill could rise 3.5% in 2019, study predicts

The price of food could increase by up to 3.5 per cent in 2019, an annual study of food prices predicts, but there's good news for Canadian consumers buying meat and seafood, which are projected to become cheaper.

Meat and seafood have seen sharp increases in recent years, but a shift away from eating meat to a more plant-based diet is reducing demand.

Canada's Food Price Report 2019, an independent analysis produced by university researchers, predicts the price of meat will drop by up to three per cent and seafood by two per cent. 

But those drops are more than offset by rising prices in other areas, led by a 4-6 per cent hike in the price of vegetables.

The annual food expenditure for the average Canadian family of four is expected to increase by $411 in 2019 to around $12,157 for the year.

That hike is a little more than for 2018, when the overall cost of food rose by about 1.8 per cent, in line with the report's predictions for the year, which was a 1-3 per cent increase.

Restaurant prices, which rose steeply in 2018, are expected to take another jump and a family could spend an additional $143 on out-of-home food purchases.

Food economy researchers from Dalhousie University and the University of Guelph look at numerous factors to determine how food prices might change, everything from the weather, the retail environment and changes among food processors to consumer preferences.

Canadians are eating less meat

A big trend is the drop in meat consumption, with a separate survey by researchers from the same two universities suggesting 32.2 per cent of Canadians are thinking of reducing their meat intake over the next six months.

That is based on interviews with 1,067 Canadians over age 18 in September 2018 with a margin of error of 3 per cent or 19 times out of 20.  

"We're seeing a gradual shift to more vegetarian and vegetable-based diets in the markets," said Simon Somogyi, one of the lead authors of the Food Price Report

The authors call this the "protein wars" with pulses and legumes replacing meat in North American diets, leading to a fall in demand, especially for beef. In the past year, Canadians consumed approximately 94 million kilograms less beef annually, compared to 2010.

Young consumers are leading the way, with 63 per cent of vegans under age 38. That could mean big changes in the tastes of young families down the road.

Changing tastes ahead for food producers

"We see a clear market segment that is changing. Under-35 females are leading the way to plant-based diets and that is having a big impact on food systems," Somogyi said.

It's not just the women. Men are also leaning towards eating more vegetables and the very image of meat as the basis of a man's dinner is changing. Among the baby boom generation, the trend is toward a "flexitarian" diet, meaning less meat and more meat alternatives.

Even Canada's Food Guide, scheduled to be updated this year, is set to notice this trend, according to the Food Price Report.

The report predicts the price of meat will spiral downwards until 2020, until food producers adapt to the new marketplace.

Higher prices hurt low-income Canadians harder

Trish Hennessy, executive director of Upstream, a non-profit group focused on healthy living, points out that the food choices Canadians make depend on their income.

"There's the people who are buying organic vegetables and eating out. They've got lots of choices," she said.

"But if you live on social assistance or a pension or you are working for minimum wage, you are unlikely to be able to afford the kind of healthy diet recommended in Canada's Food Guide."

Those low-income people will feel the impact of food price increases the hardest, she said. And lack of fresh food plays into health issues such as diabetes and increased childhood obesity.

The kind of groceries people select also depends on their geographic location — in Canada's North the price of fresh fruits and vegetables are so high that many cannot afford them.

The price of seafood is also falling because of falling demand, though global market forces play a role, Somogyi said.

The USMCA trade deal opens Canada's market for poultry and eggs, but Somogyi said most of those price differentials are too small to have an impact.

Effects of free trade deal, climate change

Most significant of the trade deal's impacts is allowing U.S.-made ingredients in yogurt, cheeses and some other dairy products. Whether that will make a difference to the family grocery bill may depend on your grocer.

"Will it be passed to the consumer or will it be absorbed by the retailer? Most retailers operate on very small margins," he said.

As consumers abandon meat in favour of vegetables "that increases demand and that increases the prices."

Other factors also could affect vegetable pricing over the coming year, among them currency fluctuations and changes in the weather.

With the unpredictable impact of climate change, Somogyi is hesitant to say definitively how the weather will change, but El Nino, a warming of the Pacific Ocean, is likely to take over from El Nina and result in drier weather, following a cold winter. North America may have extremely dry conditions and problems with access to water that could affect growing conditions and push up prices.

"It has an impact on producers. Most of our produce we used to get from California and it is highly perishable and has to be shipped by truck,"  he said.

Somogyi said researchers avoided trying to predict the exchange rate of the Canadian dollar against the U.S. dollar, but that could also have an impact on vegetable and fruit prices.

Concern over high vegetable prices

Abby Langer, a dietitian in Toronto, is concerned that a sharp rise in vegetable prices will cause some Canadians to eat fewer vegetables.

"Vegetables have been identified as a luxury item with that increase of up to six per cent," she said.

Affordability can be a problem for middle-class families as well as low-income Canadians, she said, pointing out that price is an incentive and they may be faced with cheaper meat as well as more expensive veggies.

"People may make other choices if they can't afford vegetables. Canadians already eat too few," Langer said.

"Remember if you can't afford fresh vegetables, frozen ones are just as nutritious."

She applauds the change in Canadian eating patterns to more plant-based diets.

"People are really health conscious and that's a good thing. Dietitians hope to encourage that.".