Canadian food suppliers are once again issuing warnings to food retailers, informing them of upcoming price hikes.
The letters indicate that more price increases will hit grocery stores this fall in a year that has already seen nearly double-digit increases in food costs.
In some cases, the higher prices are due to the approval of the Canadian Milk Commission for a second increase in the price of milk this year. Farm milk prices will rise by about two cents a liter, or 2.5 percent, on Sept. 1.
However, dairy processing companies also appear to be facing their own increases: there would be the so-called reduction in price increases that industry observers warned.
In some cases, the higher prices are due to the approval of the Canadian Milk Commission for a second increase in the price of milk this year. (Sean Kilpatrick / The Canadian Press)
Lactalis Canada, for example, said in a letter to customers that it should implement an average national market increase of five per cent this September, a rate it said takes into account CDC’s price increase, as well as the company’s “significant inflationary costs”. faces.
Arla Foods Canada issued a similar warning, saying the price increases for its products coming this September reflect higher costs of milk ingredients and “inflationary impacts on freight and packaging transportation.”
Saputo Dairy Products Canada also said it would implement price increases in the five percent range, depending on the category.
“Producers have faced an increase in production costs, as well as rising costs of food, energy and fertilizers, which have had a significant impact on the adjustment of the price of milk on the farm. ‘this year,’ Saputo said in a letter to its retail customers.
“In addition to these regulated increases, there have been sustained and unprecedented inflationary pressures that have affected manufacturing, energy, labor and distribution costs throughout the supply chain.”
Food prices have risen nearly 10 percent last year. (Carlos Osorio / Reuters)
Shared price increases with grocery stores underscore how regulated dairy price increases add to additional price increases across the supply chain, said Gary Sands, senior vice president of public policy for the Canadian Federation of Dairy Products. Independent groceries.
“The timing of the increases almost seems to be surpassing the regulated increases,” he said. “The net effect is to further aggravate the problem and concerns about affordability.”
These concerns are especially acute in rural and remote communities, where transportation and fuel surcharges are higher, Sands said. “The rising price of these essential products is especially worrying in these communities.”
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After the increase in farm food costs in the store
Rising spending along the supply chain and even the weather are some of the factors behind the rising food costs that Canadians see in the grocery store.
The price of food purchased in stores rose 9.7 percent in May compared to a year ago as the cost of almost everything in the grocery cart rose, Statistics Canada said last month .
Sylvain Charlebois, a professor of food distribution and policy at Dalhousie University, said the pace of rising food prices could rise by up to 10% before it starts to slow.
“We expect food inflation to peak in late September,” he said. “It can actually go north of 10 percent before things start to calm down.”
The U.S. Bureau of Labor Statistics said Wednesday that the inflation rate for food consumed at home in that country reached 10.4% in June, the largest increase in 12 months since 1981.
Charlebois said Statistics Canada is expected to release similar food inflation figures when it reports on the consumer price index for June next week.
Rising prices will pressure grocery stores to promote their private label options, also known as a retailer’s own brand, he said.
“Consumers are bargaining sideways or downsizing anything and everything right now and switching to discount stores,” Charlebois said. “They are much more sensitive to the cost of living.”
Meanwhile, letters sent by suppliers to retailers explaining the reasoning for the cost increases are part of an effort not to be accused of “greed,” he said.
“The last thing processors want is to become a scapegoat and be blamed for higher food inflation,” Charlebois said.
“Inflation is affecting all Canadians out there, but it is also affecting the political economy of food and how the food industry is perceived.”
Lactalis said in its letter to customers that it is “very aware of the impact of inflation on consumers.”
“As we all know, this cycle of inflation is driven in large part by the last phase of the pandemic and the global geopolitical situation caused by the Russian invasion of Ukraine and the ongoing conflict,” he said. the company.