High cost of living could be cooling, says researcher, but will have long-term consequences
Food insecurity and housing at front of Canada-wide concerns
The director of the agrifoods analytics lab at Dalhousie University says inflated food prices may be levelling out after months of increases — but the high cost of living will have long-term effects.
Sylvain Charlebois told CBC News on Monday that Canada has the third-lowest food inflation rate of the G7 countries, behind Japan and France.
"Things are calming down. Prices aren't going up as much as they used to, which is going to give some breathing room to grocers to really plan for promotions," Charlebois said.
"The U.K., the U.S., Germany — they all have a much higher food inflation rate. Germany is at 16.6 per cent."
It's important to note, Charlebois said, that the sharp climb of food inflation rates is a global phenomenon.
"I'm concerned for the industry, to be honest. Right now, as you look at social media, grocers are being destroyed, being accused of 'greedflation,' and, frankly, those accusations are baseless unless someone actually has data we don't have access to," he said.
"We've actually looked into financial statements of grocers, and they are recording profits but margins are the same over the last five years. The exact same. In terms of percentages, they're not making more."
Charlebois said a freeze on prices for some staple food items would be a quick and easy way to give a break to consumers. It's already happening in parts of Europe, he said, but is voluntary and not regulated.
But he acknowledged some companies are likely taking advantage of the current economic situation. He said he wants to see Canada clamp down on price-gougers the way the United States has in the beef industry.
Interest hikes hope to cool economy
A hike in interest rates by the Bank of Canada in September was among the first steps by the country's central bank to try to rein in inflation.
Memorial University professor and economist Lynn Gambin said the move will prompt people to put off major purchases, such as a house.
"It certainly will cool off things in markets like the housing market where it requires people to borrow to make those purchases," Gambin said.
"For people who are on incomes that are not indexed, or wages that are not indexed into the rate of inflation, they are seeing a real loss in their real earnings or in their purchasing power they have. Doing the exact same thing as they were doing before won't get them as much in their grocery basket."
Gambin said people are more frequently having to decide how they're going to balance mortgage and rent payments with their grocery bills.
Food insecurity is one issue at the forefront of the discussion right now, she said, and people might choose to buy things that are less expensive but also less healthy.
"There's going to be long-term repercussions of that for what it means for people's health, for their capabilities in the labour force, for the cost to the health-care system as well."
With files from CrossTalk