Food inflation creates multi-layered challenges


Life is considerably more expensive than it was a year ago. The cost of everything, from fuel to food, is rising and there’s little Canadian consumers can do about it, thanks to an opaque supply chain and widespread industrial integration.

Climbing food costs are a universal issue affecting shoppers of every income level. While many people can reduce their gas usage by opting for alternate forms of transportation, food is an unavoidable daily expense.

In May, grocery prices were up 9.7 per cent compared to the same month last year. The costs of such necessities as fresh vegetables, meats, dairy, pantry staples and cooking oils are all trending upward, with no signs of slowing down. According to Statistics Canada, three in four Canadians are having a hard time meeting their day-to-day expenses, with food costs being the top concern for many. People are going hungry to make ends meet.

So, what’s the solution to runaway food inflation? It’s a complicated question, without an easy answer.

Earlier this month, Manitoba NDP Leader Wab Kinew pitched the idea of ​​an all-party affordability committee to tackle the inflation issue locally. It’s unclear how exactly such a committee would go about addressing the cost of living, and Premier Heather Stefanson has, thus far, expressed no interest in the official Opposition’s proposal. A spokesperson for the premier pointed to the government’s recent education tax rebates as one way of easing the pressure on provincial pocketbooks, and added that the government is exploring other relief measures.

Manitobans, especially those living in poverty, need more money to weather the current inflationary trend; that much is clear. But they could also benefit greatly from broader systemic change.

At last week’s Council of the Federation meeting, which Manitoba’s premier attended, provincial leaders called on the federal government to improve the country’s supply chain through increased infrastructure funding and reduced regulations. It’s an acknowledgment that the current system isn’t working.

The cost of food is directly affected by the long and winding journey it takes from the farmer’s field to the grocery-store shelf. Fertilizer and other farm input prices have increased alongside the cost of transportation, which bumps up the price of everything further down the chain, from manufacturing to packaging to stocking. The sum of all these incremental increases is inevitably passed on to the consumer.

It doesn’t help that Canadian shoppers have little choice in terms of where they buy their groceries.

The vast majority of large-format grocery stores are owned by three companies: Loblaws, Empire and Metro, whose holdings include (but are by no means limited to) such familiar retailers as Real Canadian Superstore, Dominion, Extra Foods, Safeway, Sobeys, IGA, FreshCo and Shoppers Drug Mart. Less competition means less choice, which means less price differential for consumers.

In 2020, executives of the Big Three admitted to a House of Commons industry committee that their companies had discussed a decision to simultaneously cut pandemic pay increases for employees. Loblaws has also been caught price-fixing in the past, most notably in the 2018 investigation of bread-price collusion. Simply put, this country’s major grocery providers appear to be comfortable bedfellows when it comes to competitive pricing.

If Manitoba’s political class is keen to help citizens navigate inflation now and in the future, perhaps it should focus on strengthening the local food economy, by investing in farmers who sell products directly to customers, and creating an environment that encourages more local independent grocers to set up shop.

Such measures, in addition to immediate financial relief for those most affected by food inflation, would help ensure everyone can afford to eat.


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