Canada holds the unwelcome title of having the highest rate of food inflation in the G7. And while that’s putting added price pressure on Canadian consumers, a few key items are driving much of the pain.
The annual rate of food inflation climbed by 7.3 per cent in January, according to numbers released this week by Statistics Canada, more than double the pace from six months ago.
By far the biggest driver of annual price increases was the end of the tax holiday the former Trudeau government put in place for restaurants, snacks and other food items from mid-December, 2024 to mid-February, 2025.
In the same way top-line food prices declined 0.6 per cent a year ago because of the tax holiday, the end of that break is having the reverse statistical effect now.
But several grocery items are soaring in price for other reasons. After years of declining cattle herds, beef prices jumped 18.8 per cent in January from the year before, while low coffee yields pushed java prices up 29.8 per cent. (By comparison, in the U.S. beef increased 15 per cent and coffee jumped 18 per cent.)
And because Statscan gives different weightings in calculating inflation that are proportional to the share of household spending on each item, those particular price increases matter a lot to overall food inflation.
Think of it this way. If pestilence wiped out mushroom crops, supply shortfalls would make mushrooms a lot more expensive. But since households don’t spend all that much on mushrooms, even skyrocketing mushroom prices would do little to nudge the overall inflation needle.
However, Canadians do spend a large share of their money dining out, or buying beef products and coffee, so rising prices for them have an outsized effect on food inflation.
Of course, none of this changes the fact that shoppers are still experiencing sticker shock across grocery aisles – lettuce prices climbed 6.7 per cent, while soup was up 6.3 per cent.
At least mushroom prices climbed less than 1 per cent.
Leave a Reply
You must be logged in to post a comment.