The federal government announced it has received commitments from Canada’s five largest grocery chains to take “concrete actions” including discounts, price freezes and price parity campaigns to restore food price stability.
Ottawa said in a news release that the country’s largest grocery chains, including Loblaw (L.TO), Empire (EMP-A.TO), Metro (MRU.TO), Walmart (WMT) and Costco (COST), are taking action. He said that he had identified. , is expected to be introduced in the coming days and weeks with the aim of stabilizing food prices.
“Canadians can expect measures such as aggressive discounts, price freezes and price match campaigns across a basket of staple foods that are the most important purchases for most households,” the government said in a news release. Ta.
“If we don’t get results, we will take additional steps to restore the food price stability that Canadians expect.”
The government also announced that it would establish a specialized grocery task force within the Consumer Affairs Agency to monitor the behavior of grocery chains and investigate practices such as “shrinkflation.”
Innovation Minister François-Philippe Champagne said “nothing is off the table” in stabilizing food prices in Canada. The government had previously threatened to impose new taxes on grocery stores unless they came up with a plan to deal with soaring food prices.
The head of Canada’s largest grocery retailer met with federal officials, including Champagne, in Ottawa last month to discuss food prices.
Sylvain Charlebois, a professor of food distribution and policy at Dalhousie University, said the measures announced Thursday will do little to lower food prices in Canada in the short term.
“It’s business as usual. There’s nothing that’s going to help Canadians at this point other than what’s already happening in the industry,” he said in an interview. Yahoo Finance Canada.
“I think the biggest accomplishment of the last four weeks was getting the Big Five (grocery chain executives) together in the same room. And that’s it.”
The Retail Council of Canada said keeping food prices as low as possible has been a top priority for Canadian grocers since inflation spiked at the end of the pandemic.
“As food distributors, grocers buy products from suppliers and sell them to customers, which means manufacturers charge them for their products,” RCC national spokeswoman Michelle Vasilishen said in an emailed statement. “A lot depends on the amount,” he said. Grocers say rising costs from food suppliers are one of the biggest drivers of inflation.
“Therefore, it remains important that all members of the complex supply chain address their respective roles in food pricing,” Vasilyshen said.
“I am encouraged that Minister Champagne has clearly mentioned the need for manufacturers to step up in terms of their central role in food pricing, and I look forward to concrete outcomes from the discussions between government and manufacturers. ”
Despite the cooling in the consumer price index, food prices remain high in Canada, outpacing headline inflation. The price of food purchased from grocery stores rose at an annual rate of 6.9% in August, slowing the year-on-year pace compared to the 8.5% increase recorded in July, but still outpacing the CPI increase of 4%. .
The Bank of Canada recently highlighted corporate pricing behavior as a concern in its efforts to return inflation to its 2% target. In a speech earlier this week, Deputy Governor Nicholas Vincent warned that there was a risk that pricing behavior itself could become rigid. He said companies typically don’t adjust prices frequently because price changes can be expensive and expensive. However, Vincent emphasized that grocery stores are now using electronic price tags to reduce costs associated with price changes.
“The biggest risk is that the recent practice of changing prices more frequently and sharply could become the norm,” he said.
“A feedback loop occurs when stores expect suppliers or competitors to change prices more frequently and consumers are willing to continue paying higher prices rather than shopping. Prices may become more sensitive to shocks and availability may become more difficult.”Inflation returns to our 2% target. ”
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
