Food inflation is complicated – it’s all too easy to blame greedy grocers
has also created significant inflationary pressure. Ukraine is a major exporter of wheat and vegetable oil . Taking those products out of the market has driven prices up – a bad situation made worse by countries like Argentina restricting exports in order to protect domestic consumers. This has caused increases in the prices of products such as pasta, flour and vegetable oils in the range of 20 per cent in the past year.
The war and the accompanying sanctions have also increased farm input costs. Ukraine and Russia export large volumes of fertilizer. The production and export of fertilizer has been compromised, pushing prices up. Russian exports have become subject to punitive tariffs. The costs of producing crops went up in Canada and around the world. Canadian agricultural prices are largely driven by international markets, and this cost pressure puts additional pressure on food prices.
Topline inflation numbers have been consistently high, but there are many differences at the product level. Pork prices have gone up just 2 per cent in the past year, but flour has gone up 23 per cent . While lettuce prices are up more than 35 per cent in the past year, they actually went down in January as seasonal production moved away from the area plagued by the virus. The inflation story is more complex than many are presenting.
The Competition Bureau has announced an investigation into grocery pricing, with a report to come out in the coming months. There might have been value in waiting until that report comes out before making the kinds of definitive comments we’ve seen accusing retailers of bad behaviour. While retailers are making record profits, there is little evidence that they are introducing excessive price increases.
Food price inflation is hurting Canadians. There may not be a lot that governments can do to buffer these increases, but we can help people understand why it is happening and what the prospects are for relief. A singular focus on unproven “greedflation,” even before the release of the government’s own Competition Bureau report on retail pricing, is doing Canadians a disservice.
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