Despite the rate of inflation slowing, food prices continue to tell a different story. The latest grocery report released by Kevin Grier Market Analysis and Consulting lays out what’s behind the increasing cost of food, with little evidence that excessive profit-taking by grocers is the culprit.
The blame game is certainly being played, says Kevin Grier, and all eyes are on the grocers. But during the pandemic, Grier says he made an effort to point out that the grocers did not take advantage of the fact that everyone was stuck going to the grocery store, as restaurants were shut down and eating-out wasn’t an option. Despite the panic buying, Canadian grocers didn’t up the prices like we saw in other countries, such as the U.S.
In 2022, we started to see a significant increase in grocery prices. However, during 2020 and 2021, their costs were inclining too, which is causing a bit of a catchup game to occur, he says.
“[Based on] StatsCan data on cost of food to grocers, it’s gone up dramatically in the second half, or say after, May of 2022,” he explains. “So you’ve got to look at the cost first and foremost in terms of what the problems are.”
So — how do we reverse this trend?
It’s tricky, says Grier, as fundamentally the commodity markets are not slowing down, and don’t appear to be trending that way anytime soon.
According to the industrial products price index — which is the cost of goods that grocers buy — it’s gone up again, and fairly dramatically. And as far as the stock market goes, it’s not excited about the corporations returns, and their stock prices have been sagging.
“There is really not a lot of evidence to talk about corporate greed. Greedflation is the latest thing. My personal preference has always been just inflation, if we’re going to use these kinds of term. So really, it’s a non-starter in terms of tax increases on these guys,” he explains.
According to the grocery report, it’s not just a matter of specific products on the rise — it seems to be fairly broad, and across the board. Of note, cereals were up 16 per cent compared to a year ago, eggs were up 12 per cent, meat was just below eight per cent, and dairy sits just under 10 per cent. The fundamentals behind it all, says Grier, isn’t grocer greed, it’s commodity and energy costs.
Check out the full conversation between Grier and RealAg Radio host Shaun Haney, below:
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