Canada’s inflation rate decelerated to 3.4 per cent in the year up to May, Statistics Canada said Tuesday, led by sharply lower gasoline prices. But beneath the headline slowdown in consumer prices, many facets of the cost of living are still increasing at an eye-watering pace. Grocery prices went up at an almost nine per cent pace.
Despite gasoline prices dropping enough to drop the overall inflation rate by a full percentage point? Surely transport costs must have gone down significantly. What ever could be going on, here?
Although a little outdated being from Nov 2022, Statistics Canada has a great breakdown of what contributes to the rising costs of food beyond transportation costs.
I’m not saying corporate profit-taking isn’t affecting prices or that we shouldn’t do anything about it, just that there’s a lot going on here. Last time I looked Loblaw’s profit margin had increased from 2% to 3% from 2020-2023. A 50% increase is a lot and I think they’re scum for doing that, but it doesn’t explain the overall ~30% increase in food prices.
Long read ahead.
Loblaws is FAR from alone in terms of being part of the cause. I work in food manufacturing for a very big company.
For at least two years in a row now, my company has held a large meeting to tell us that they are making record profits.
This company has its hand in a pretty large variety of products. If you live in Canada, the US, or Mexico, there is a very good chance that you have either eaten their products or purchased them. If you’re from the UK, you’ve probably seen some of their products on shelves, too. For my job safety, I will not disclose which company, although it’s probably not the one you’re thinking of. They have a LOT of sub-brands, and I probably would have never made the connection between them if I didn’t work with those products myself.
I agree that this goes beyond just Loblaws. Every rung on the ladder is trying to squeeze as much profit as possible. You have the ingredient manufacturers. You have the packaging manufacturers. You have the transportation companies. You have the food manufacturers. You have the retailers. Many manufacturing companies work with multiple suppliers. Every step adds more to the cost. Everyone wants their profits.
If companies throughout the chain decide to charge more, the cost can become compounded. My company sells to Loblaws. If my company charges new high prices, Loblaws’ will use my companies new high prices as a base-line for their own profit goals. That 20% to 27% difference is likely from profiteering behind the scenes. Some of our products have nearly doubled in retail cost over the last 5 years.
I work at one company. I previously believed that it wasn’t that big. I doubt that we are the only company to be like this within Canada.