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The federal government is promising to closely scrutinize the grocery market and bring more transparency to pricing, announcing Thursday that grocery chains have promised discounts and price-matching as part of a plan to “stabilize” grocery prices.
But the proposals released so far will not change the trajectory of prices and include nothing new to help consumers, said Sylvain Charlebois, a Dalhousie University professor who studies the grocery market and food supply chain.
The announcement is “business as usual,” he said.
Last month the government said it would force the country’s biggest grocery-store chains to submit plans to Ottawa by Thanksgiving on how they will stabilize prices. The announcement was part of a wider push to tackle the affordability crisis pushing many households to the brink. The crisis is also widely cited as a factor in the governing Liberal Party’s flagging popularity.
Ahead of that Monday deadline, Innovation Minister François-Philippe Champagne outlined a plan from grocery stores which is in line with what they already do. The minister told reporters in Ottawa that the grocery chains had pledged to freeze prices, price-match, and roll out discounts.
“I’ve been looking at some flyers this morning and you already see action,” Mr. Champagne told reporters.
“Discounts come out on Thursday, so no,” said Mr. Charlebois, in response to the Minister.
The professor, who is also the director of Dalhousie’s Agri-Food Analytics Lab, said this week’s flyers contain prices that are no lower than usual, and nothing in the government’s policies or comments to grocers since September would have changed what’s in them.
“I fail to see anything which can help consumers, right now, beyond what was already being done,” Mr. Charlebois said.
The government also said it will establish a task force within the Office of Consumer Affairs to monitor the grocery sector; accelerate work on a grocery code of conduct to bolster fairness and transparency in the industry; and improve the availability and accessibility of data on food prices and the cost breakdown throughout the Canadian agri-food supply chain.
Mr. Charlebois said those plans won’t have an immediate effect on prices but will increase competition over time.
Prime Minister Justin Trudeau in September said the government expected the retailers to “stabilize and even bring down prices.” But after Mr. Champagne met with the senior executives of Loblaw, Metro, Sobeys, Costco, and Walmart, he characterized the goal differently.
On Sept. 19 Mr. Champagne said the government’s goal was to moderate the pace of grocery price increases so that they are “in line” with general inflation.
The rate at which food prices are increasing outpaces overall inflation – something experts say is unmanageable. However, the data show food inflation is already coming down. It is now at its lowest rate since January, 2022 and economists were already expecting food inflation to fall further. It was in the double digits for much of last fall and winter.
Last month Statistics Canada reported the annual consumer price index inflation was 4 per cent in August, while annual grocery price inflation was 6.9 per cent.
Mr. Charlebois said the annual food price report his group released last year already showed that the food inflation rate would be around 5 per cent and none of the slower trajectory in prices can be attributed to the plan the government unveiled Thursday.
“It won’t accelerate our pace towards lower food inflation,” Mr. Charlebois said.
He said if the government had wanted to have an immediate impact on prices for consumers it could have taken other action, like announcing changes to the sales tax it imposes on snacks.
Mr. Champagne defended the government’s announcement Thursday, saying he only shared some examples of what the grocery stores will do to rein in price growth. He said he couldn’t release more details because he didn’t want to affect competition between the grocers.
Michelle Wasylyshen of the Retail Council of Canada defended the grocery chains and said costs higher up the food supply chain account for 70 to 80 per cent of checkout prices.
“Each grocer has made its own individual submission to government and will deploy its own approach to the challenge,” she said.
Is this perhaps part of the reason for some big price increases in recent months? They were preparing to “freeze” the price there for a while so that the government can claim victory?
There were big increases at the farm gate around the time the Ukraine conflict began, because of the conflict and some other factors that were impacting agriculture at the time (e.g. the weather). As the supply chain buys from farmers on futures contracts, grocery stores have felt the pinch only more recently.
The farm gate price crashed this year. Said conflict isn’t affecting the food supply like we imagined and those other issues are starting to clear. That means the contracts going forward are at a much lower price.
Grocery stores “agreed” to (i.e. pushed for) a price freeze because it means that now they can legally collude, so to speak, to keep the prices high, even though their supply source is no longer high. They knew what was coming, just as we knew prices would start to fall in the coming months as those high priced contracts started to expire. Now they will become frozen in a high state to avoid that fate.
It’s clever. I’ll give them that.