While the Amazon takeover of Whole Foods is commanding the most headlines in the food industry these days, Dalhousie University released the Canada's Food Price Report Mid-Year Update today that highlights expected food price changes over the balance of the year. While overall food prices are expected to rise by 3 to 4% by the end of this year, this has fallen slightly from the 3 to 5% estimated at the end of the year.
Meat prices are perhaps seeing the bulk of the attention from this report, estimated to increase from 7 to 9% this year, from the 4 to 6% increase released in the December year-end report. To put this move into perspective with past years, the upper end of this expected increase, or 9% (blue bar), was plotted against the December-through-December consumer price index for meat over the past 10 years. This would be the second largest year-over-year increase in recent years while would follow the 1% decrease in prices experienced in 2016. The study points to a combination of low inventories of both beef and pork in Canada as well as increased margins from retailers seeking to return to higher profits.
One interesting aspect of this study is a challenge of Statistics Canada's Consumer Price Index data (CPI). "The Consumer Price Index (CPI) was never meant to be perfect. However, this year, with food inflation, the CPI seems off, way off," stated the study. The study points to higher food prices so far this year, with its nonscientific study pointing to a 5% increase in overall food costs since January (11% higher in the case of meat), while pointing to Statistics Canada's CPI data which have either fallen or remained steady since September 2016. The Dalhousie study points to the idea that if food prices are really falling in the manner reported by Statistics Canada, consumers are not seeing the benefits.
It is interesting that this comes at a time when Agriculture and Agri-Food Canada is inviting Canadians to comment on what matters to them when it comes to the design of a nation-wide food policy. Perhaps step one should be an enhanced understanding and monitoring of food prices.
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Another interesting observation is that studies such as this are normally followed by comments from economists and dieticians on how to stretch your food dollars. A Global Television report from Vancouver suggested that meat purchases can be replaced with lentils, chickpeas and dry beans.
Uncertainty in food prices during the balance of the calendar year, as noted in the report, includes Canadian dollar volatility, weather (California), the Trump administration and potential impacts to North American Free Trade Agreement and Canada's supply management, to name a few. Oddly, the northern U.S. drought and the climb in spring cereal prices were not mentioned.
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