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Consumers are paying more for their food at the grocery store, especially for products like meat and dairy.
According to Statistics Canada, the cost of groceries is up about 2.7 per cent from last year, but food analysts are saying the prices consumers are being greeted with on the shelves are anywhere from 10 to 15 per cent higher than normal, depending on the item.
Melanie Morrison, CEO of BetterCart Analytics, said her organization has calculated a 7.8 consumer price index (CPI) for meat and 5.08 for dairy from 2020 to 2021 — numbers that are higher than what Statistics Canada has reported.
CPI is a calculation of food inflation from one year to the next. It measures the percentage change over time in the average cost of a large basket of goods and services bought by Canadians.
Comparatively, fish and seafood are around 2.45 CPI and food items in the “other” category are around 2.47.
Vegetables, comparatively, have fallen in price.
“Consumers are going to feel this,” Morrison said.
While Morrison said Statistics Canada is exceptional at what it does, she said its numbers might not be showing exactly the extent of what Canadians are seeing at the grocery store.
Morrison said BetterCart’s data has produced higher indices than Statistics Canada, likely because of its data set. BetterCart looks at close to two billion product records to compare and gather pricing data.
The rise in prices is affecting everyone, from consumers and retailers to packaging and transport.
Casey Collins, CEO of Prairie Meats, said the company is “trying to find value on the market,” but said it has been “a struggle” with the rising prices.
“We’re seeing it right down to the bottom line,” he said. That includes cost increases directly from manufacturers in facilities across Canada and the world.
With everything from seafood to beef falling prey to cost hikes — some categories as high as 40 per cent — it’s something Prairie Meats is dealing with “the best we can,” according to Collins.
He said he hasn’t seen costs like this in years.
Even just the cost of a simple steak will likely run shoppers at least $7 for a cut that would have cost around $3 a decade ago.
“In my time in the industry, these are some of the highest prices I’ve ever seen on certain categories,” he explained, adding the industry is known to fluctuate in costs. But often high prices like those consumers are facing are short-lived.
“I don’t want to date myself but … when I got into the industry in the early ’90s, products represented what people’s wages were.”
Morrison said the last two years have seen “exorbitant increases for consumers at grocery stores across the country,” she said.
“Consumers are being hit exceedingly hard with these price increases.”
Coupled with COVID-19 financial concerns, Morrison isn’t seeing many positives for consumers’ wallets.
Josh Cormack from Brooksdale Coulee Farms said he has been lucky that producers aren’t as affected by inflation as consumers are.
The farmer has been seeing slightly lower prices to sell calves compared to the past five years. While prices regularly fluctuate, Cormack said there is concern that consumers might look for other options if costs continue to grow.
“From our standpoint,” he said. “You really hope that people don’t get deterred from beef in general.”
What’s driving prices up?
Dalhousie University professor of food distribution and policy Sylvain Charlebois said in a November interview on Gormley that food prices have been increasing across the board in Canada, based on three main reasons — increased costs for feeding livestock and higher costs to producers generally, labour shortages, and higher prices to transport goods.
Cormack saw shortages of feed for animals as a result of this year’s drought, along with some issues with supply chains. Collins agrees with this message saying the drought put a lot of pressure on the meat industry this year.
A shortage of workers in the industry was a problem long before COVID-19. Charlebois said there have vacancies “across the board” in the agri-food sector and recruitment has been slow.
The pandemic made that worse and this has contributed to higher costs for transporting on water and land. That has made water one of the priciest ways to move cargo when usually it’s one of the most affordable options. Rising energy costs are making land transportation more of a barrier, too.
With the flooding in B.C., Charlebois said that as of Nov. 22, farmers were waiting for products stuck on railways in the Rocky Mountains.
“Given that harvest wasn’t that great this year, it’s probably quite frustrating,” Charlebois said.
A less-efficient supply chain will always end up increasing prices at retail “no matter what,” for all products — including food. Some industries are seeing harder hits than others, like the cattle industry, according to Charlebois.
Morrison also raised concerns about supply chain breakdowns. Any sort of problem along the line can lead to an increase in shelf prices, leaving consumers to make up the difference in costs.
These issues are evidence the onslaught of problems that have hit the meat industry over the past year seem to be continuing, in Collins’ eyes. He said he expects fallout in Saskatchewan as a result of the B.C. flooding and extreme weather that have caused farms to be shut down and stalled transportation of goods.
Collins explained the industry is much more hand to mouth right now, with the meat producers are selling going directly to the dinner tables and mouths of consumers, rather than years where a surplus meant meats were purchased to store in freezers for weeks to come.
“The important thing is what consumers are feeling and what they’re experiencing because that has a direct relation to whether Canadians are getting the nutrition that they need and in the ample amounts that they need,” Collins said.
Hitting where it hurts
Rising food costs are affecting the wallets of consumers from all walks of life.
Laurie O’Connor, executive director of the Saskatoon Food Bank and Learning Centre, said inflation could have a big impact on the people the centre serves.
“There are families that are just at the edge of needing further supports,” she said. “I think we’ll see increases because of the cost of everything going up.”
The food bank might struggle seeing more people needing assistance in feeding their families, though, with their own funds not going nearly as far at each grocery shop.
O’Connor said rising costs will “definitely” impact the food bank in the food it purchases because it won’t get as much food as before with the amount it has to spend.
It means the food bank will have to be more “cautious and prudent” with what and when it orders, she added. With beef especially, O’Connor said food bank officials are “going to get far less at this point than we thought we were.”
She also anticipated an impact on donations.
“Our budgets are all going to be stretched,” she explained.
Follow the money
With prices so much higher, is there extra money being made?
Neither Collins nor Morrison know exactly. Morrison hypothesizes the increased cost might help cover costs for additional problems arising somewhere along the chain, with perhaps a small margin of profit.
Collins said retailers are the “last hit on the road,” following the trend of what the market demands. He suggested costs outside the industry like packaging, buying materials and getting products moving could be what’s driving the price up.
“It’s not just the farmers, or the packers, or the retailers, or even the restaurants that are gaining from this. I think they’re just trying to stay with it,” he said.
The attitude towards increased costs now is very different than when the pandemic first began, Cormack recalled. At that time, his meat — and that of every other producer in the province — was flying off the shelves.
“I think people were scared,” Cormack said. “They didn’t know if they were going to be able to get it.”
Now he understands the frustration and difficulty of prices going up but said he doesn’t see any more profits with the prices rising.
“I don’t think that necessarily anyone is going to get really rich anywhere in this,” he said. “Sometimes consumers start to wonder (if) grocery stores are making the extra profit or farmers or packing plants, and I don’t know if there’s a whole lot of extra profit there as opposed to just driving the supply chain.”
The greatest concern, Morrison noted, is that consumers are feeling the pressure of the increased costs.
How to shop inflation at the supermarket
Collins said nobody wants to, or can, accept the current grocery prices.
“Unfortunately we all need to eat and it’s not something we can just decide not to purchase, it’s just changing our selection of what we purchase,” Collins said.
The overall picture of the agri-food industry isn’t overly bleak, Charlebois said. Food access hasn’t been a significant challenge but food affordability has become more concerning.
In the past, Collins said he remembered inflation matching the wage increases seen in society. He doesn’t think that’s the case anymore.
Charlebois said Statistics Canada data shows salaries in Canada are “moving sideways,” with salaries not really increasing but inflation at the grocery store truly becoming an issue affecting most people right now.
Collins said he finds it hard to give advice when it comes to issues like how someone can or should put food on their table.
“As a consumer myself, we’re always looking for value and always looking for the best things for our family,” he said.
“It’s one thing when gas prices go up and you can try to avoid (driving), use public transportation … It’s kind of hard to go without food.”
Cormack doesn’t want consumers to feel uncomfortable paying for meat.
“I wouldn’t ask anybody to buy something that is out of their comfort zone as far as cost; it’s not fair from a producer standpoint to ask for that,” Cormack said. “But I think there are lots of local options that people can search out and find that the quality is better and the price is better.”
Looking to local sellers and markets for meat can also help shorten the supply chain, Cormack suggested.
“I think consumers would see rewards with better-quality products and producers would see rewards with demands for their products,” he explained, adding it also helps to reduce society’s carbon footprint in the process.
To reduce the cost of groceries, Morrison and Charlebois recommend making a hard-and-fast grocery list based on researching the best prices on items and deciding on what purchases need to be made. That also means learning to cut items when the price is just too high and not assuming that a certain place has the best price on a particular item.
“These times are tough and consumers need as much help as they can get,” Morrison said. “The best thing they can try to do is create that shopping list and be able to use the tools that are available.”
While the tools at the hands of consumers are limited, BetterCart can help consumers compare prices at a variety of stores to show where they can save as much money as possible.
“It is very challenging right now for so many people,” Morrison said. “There are ways, though, to get some deals and it’s not always in the fliers.”
Charlebois said it can be good to make the freezer aisle a friend in times like these, where prices remain largely stable. He also recommended the “enjoy tonight” purchases — items that are nearing expiry and might be marked down — for consumers hoping to save a few dollars here and there.
And, of course, there’s always coupons.