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A new report predicts food products in Canada will have an average inflation rate increase between 2.5 and 4.5 per cent next year, down from the average five to seven per cent in 2023.
More than 30 experts from Dalhousie University, the University of Guelph, the University of Saskatchewan and the University of British Columbia collaborated on the annual report predicting food inflation in Canada, which was published on Thursday.
The report aims to review the year in food policy and costs and predict the rate of inflation for the next year.
One expert says 2024 will be important because it is the first full year where prices are expected to “normalize” since the COVID-19 pandemic.
“This is a good news report,” Sylvain Charlebois, one of the authors of the publication and director of Dalhousie University’s Agri-Food Analytics Lab, told CTVNews.ca in an interview. “I think people should feel positive about 2024.”
In 2022, the report estimated the overall food price increases would be between five to seven per cent — the latest data from Statistics Canada pegs the food inflation rate at 5.9 per cent.
In the latest edition of the annual report, the authors believe the overall rate of inflation will be lower in 2024, falling to somewhere between 2.5 and 4.5 per cent.
According to Charlebois, things are “much calmer now,” which could result in more deals and potentially some price wars between the big grocers.
“Margins are going to be everything,” he said. “And because consumers don’t have any money now, grocers will be fighting for our business.”
Over the next year, Charlebois believes grocery stores will be offering more incentives to consumers like loyalty programs and deals to entice people.
One of the tactics used is selling items at a loss, which brings the customer through the grocer’s doors, but then the store would increase the prices for other items, hoping the consumer will buy those as well, he explained.
“For example, I can tell you that some turkeys are sold at a loss right now, but they want you in there so you can buy the overpriced cranberries, the overpriced stuffing, the overpriced carrots and things like that,” Charlebois said.
YEAR IN REVIEW
This year was marked by soaring food inflation that burned a hole in the pockets of Canadians.
Previously affordable staples, like pasta, rice and bakery items, saw significant inflation rate increases over the past year. Some meat products, such as, beef continue to have elevated costs, while others, like pork, have become the cheaper alternative in the last 12 months.
As inflation over the last several months started to cool, the cost of some products remains stubbornly high.
Vegetables and fruits at points during the year also soared in costs, however, the products are largely dependent on climate, Charlebois said.
Edible oils and fats have seen year-over-year increases consistently in 2023.
Although the year has been marked by increased prices, some food items have become less expensive.
In the latest Consumer Price Index report from October, StatCan notes lettuce, bananas and flour and flour-based mixes have decreased in price.
WHAT WILL INCREASE IN 2024?
Researchers use prediction analytics models, including machine learning, to project future food prices, the report notes.
Prices for all food categories could rise by as much as 4.5 per cent in 2024, with the most significant increases of five to seven per cent in bakery products, meat and vegetables.
“Produce has always been volatile, that’s not going to change,” Charlebois said. “While we are expecting bakery to continue to rise, I’d say pork has been a good deal this year in 2023, but it’s not going to be the case in 2024.”
Dairy and fruit are expected to have rates between one and three per cent, whereas seafood and restaurant food is expected to be between three and five per cent.
The report also broke down how much this would cost for different Canadian families.
Feeding a family consisting of a man (aged 31 to 50), a woman (aged 31 to 50), a boy (aged 14 to 18) and a girl (aged nine to 13) per year is expected to cost around $16,297.20.
This is $701.79 more than 2023, due to a change in shopping habits, and slowing food prices, the report notes.
Cost breakdown of food to feed different families in Canada.
A family consisting of two women (31 to 50), a girl (14 to 18) and a boy (nine to 13) is estimated to spend $15,323.44 on food in 2024.
A family of six, with two parents, a grandparent and three children under the age of 13 will spend around $21,704.64, the report predicts.
FACTORS THAT INCREASE FOOD COSTS
Socio-economic, environmental and political issues all impact food costs, the researchers say.
According to the report, climate change is “very likely” to play a factor in cost increases and will have a “very significant” impact on the price of food in 2024.
It is “likely” geopolitical risks and input costs will both have “significant” impacts on some foods, the report notes.
In 2023, the war in Ukraine impacted several items like wheat, sunflower oil and fertilizers. The report notes the recent conflict in the Middle East could increase oil prices, which could result in the inflation of food prices.
Energy costs and inflation are “very likely” to continue to increase food costs as well.
By province, overall food cost increases are expected for Alberta, Manitoba, New Brunswick, Nova Scotia, Ontario and Saskatchewan in 2024.
Decreases in food inflation are expected for Newfoundland and Labrador, Prince Edward Island and Quebec.
British Columbia’s food inflation rate is forecast to stay relatively the same.
“In 2023, some markets were more affected than others, especially the Atlantic,” Charlebois said. “We are expecting a bit of a break for 2024 … I do believe that Ontario and Quebec are going to be battlegrounds for loyalty.”
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