Increased grocery store competition leads to food deflation in March

If you asked consumers about whether grocery bills are going up or down, they would likely say up. According to market analyst Kevin Grier and Statistics Canada, the data suggests otherwise.

Food deflation continued again in March, with declines across the store in staples, meat, and consumer packaged goods.

According to Statistics Canada, the Consumer Price Index data for “food purchased from stores” declined by 3.6% in March. That compares to a 4% decline the previous two months. For the first quarter the rate of decline was 4% in Canada compared to a decline of 2% in the last quarter of 2016.

According to market analyst Kevin Grier, much of the decline can be attributed to increased competition at the grocery store. The gloves are off, so to speak.

Prices have benn declining for dairy and eggs at retail as well. Although milk tends to be a loss leader in Canada, dairy and eggs are not typically items that grocery stores like to compete on. Even though raw costs of dairy and eggs are rising, declining prices are again a show of the competitive intensity, he says.

Despite steady costs and declining overall prices, Grier says margins have been very good due to a push towards fresh food sales in store and overall sales execution.

And the traditional grocery retailer is showing that they can compete with the giants of Walmart and Costco, even in a market with heavy competition and declining retail prices, he says. To hear how, listen below:

 

RealAgriculture News Team

A team effort of RealAgriculture's videographers and editorial staff to make sure that you have the latest in what is happening in agriculture.

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