Time to probe grocery chains for excess profits, says Algoma-Manitoulin-Kapuskasing MP
Algoma-Manitoulin-Kapuskasing MLA Carol Hughes writes a regular column on initiatives and issues that impact our community.
Inflation has hit people’s wallets hard this year. The cost of almost everything has gone up, to some degree, but nowhere is this price increase being felt more than the price of groceries.
Data collected recently by Statistics Canada shows that at the end of August, inflation had cooled somewhat to 7% for all goods.
Seven percent is still an astronomical increase in the price of goods by any measure, but that’s cooling off the highs reached earlier this year on most items.
There are a number of factors to consider, but supply chain issues have eased and the cost of gasoline has stabilized (down 9.6% in August). What hasn’t leveled off against other goods, however, is the cost of food, which rose 10.8% year-over-year, the fastest increase in cost of food since 1981.
Of course, 10.8% is the baseline. The price of some food products increased by less than 10.8%, such as meat, which increased by 6.5%, dairy products by 7% and fish and seafood by 8.7% year on year, but other items have increased in cost even more.
Fresh fruit increased by 13.2%; coffee and tea cost 13.5% more; bakery products increased by 15.4%; condiments, spices and vinegars increased by 17.2%; and, even more surprisingly, edible fats and oils, such as olive or canola oil, became 27.7% more expensive.
These prices are hard for anyone to swallow, and while we may see some stabilization in costs in the coming months, this still represents a significant increase in the amount of food being cut from the family budget. In fact, according to Statistics Canada, “due to rising prices, 20% of Canadians said their household is very (7%) or somewhat (13%) likely to get food or meals from community organizations, such as food banks, community centres, faith-based organizations, school programs or community gardens, over the next six months.
This is clearly concerning.
So where are these cost increases coming from?
This is a difficult question to answer, but there are a number of factors. Rising fuel prices across the world have made transporting goods, including food, more expensive.
Supply chain disruptions have made it more difficult for producers to get their products to market.
Labor shortages are also impacting food costs as Canada is now experiencing a structural shortage of workers as older Canadians begin to retire at a higher rate than younger Canadians entering in the labor market. In addition, there are not enough workers to fill the vacancies while the unemployment rate is near its historical lows at 5.4%.
However, one relationship with rising food costs has not been examined to the extent that it might be necessary: corporate profit.
The biggest grocery chains, Loblaws, Metro and Empire (which own Sobeys and FreshCo) have made record profits this year thanks to inflation, but we have little data to determine to what extent this may play a role in grocery prices. That is why a motion was brought to committee by the NDP calling for a review of profit-driven inflation by large grocery chains.
These are companies that have each reported record profits.
Last quarter, Loblaws reported profits of $387 million, up $12 million from the same quarter last year. Metro posted profits of $275 million, up $22.6 million from the year-ago quarter. In total, grocery chain profits reached $3.5 billion.
It is important for us to know whether these chains have played an active role in driving up the cost of food for Canadians. It certainly wouldn’t be the first time grocery chains have impacted food costs, as some may recall Loblaws admitting to fixing the price of bread in 2018, which drove the price up. bread by nearly 100% between 2001 and 2015.
Obviously, the cost of groceries is not falling as quickly as other goods affected by global inflation. We need to know all the reasons why we want to bring food prices down to reasonable levels.
