AV¾ãÀÖ²¿

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Executive Summary

The 7th edition of Canada’s Food Price Report is published for the first time by AV¾ãÀÖ²¿. 2016 marked Canada’s lowest monthly average exchange rate in almost a decade. Food price decreases at retail were both surprising and unexpected. Due to a lower Canadian dollar, vegetable prices soared early in the year which prompted Canadians to become more conscious about food prices in general.¹ In many ways 2016 was a difficult year to predict as weather patterns, the devalued Canadian dollar, a surplus of agricultural and food stocks, and volatile oil prices drove up food prices. 

In 2017 food prices are expected to rise above the acceptable inflation rate. The proverbial sweet spot for food inflation is anywhere between 1% and 2% each year. Such a threshold is manageable by all stakeholders and allows the industry to provide higher quality products at an affordable price. Food prices are forecast to rise between 3% and 5% in 2017, which is both higher than the previous year’s price increase and above what is typically considered as acceptable food inflation. 

For the average Canadian family, food expenses in 2017 could increase by as much as $420. The significance of Donald Trump’s victory in November cannot be overlooked. Dairy and eggs along with bakery and cereal are expected to remain stable and within acceptable inflation rates of 0% to 2%. The same cannot be said for vegetables, fruits and nuts, which are likely to experience a sharp price rise due to high imported quantities. Vegetables are expected to increase by 4% to 6% and fruit and nuts by 3% to 5%. Deficiencies in the supply chain could be set in motion by La Nina, a well-known weather phenomenon that occurs following El Nino. Again, Northern regions are likely to feel the brunt of such increases. 

Hog futures are higher in 2017, which suggests pork prices could go even higher next year. Even though cattle futures are expected to remain flat, we anticipate demand will increase and push retail prices higher still. The fish and seafood markets are more difficult to evaluate given the obscure nature of contractual arrangements. Nonetheless, we are expecting retail prices at the fish and seafood counter to rise due to increased demand across the country. 

By assessing the level of competitiveness in food retailing and the state of the overall economy, we are expecting regional differences with food price increases. It is our belief that both Ontario and British Columbia are likely to experience above-average increases in food prices. Newfoundland and Labrador, New Brunswick, Quebec, Manitoba and Alberta are likely to experience lower than average increases due to a weaker economy and/or a more competitive food distribution landscape.  

Table 1: Food price forecast for 2017 

Table 2: Food price forecast for 2017 – by province²

1. For more information: Charlebois, S., A. Herian, S. Chamberlain (2016). Pre-shopping habits in food retailing and consumer vulnerability. Working paper, AV¾ãÀÖ²¿ (31 pages).

2. (⬆) Expected above-average food price increase, (⬇) Expected below-average food price increase, (—) Expected average food increase.

Find out more

• Read the story on Dal News: Higher food prices expected in 2017: Canada’s Food Price Report
• Read the media release