A Leger report found that over two-thirds of Canadians feel that grocery prices are getting worse, and over a quarter blame grocery chains for rising prices over the last couple of years.
Out of the 1,529 Canadians surveyed, 64% felt grocery prices were still rising and a quarter of Canadians thought prices were about the same as a year ago.
When attributing blame for the problem 20% of Canadians blamed the federal government, 29% blamed grocery chains, and 26% felt the rising costs were due to global economic phenomena such as supply chain issues.
Economist Aaron Wudrick, the director of domestic policy at the Macdonald Laurier Institute, spoke to True North about the state of the grocery market and the causes of inflation.
He doesn’t think it’s accurate to blame grocery chains for the rise in food prices over the last few years.
“It’s a combination of many factors,” Wudrick said. “The overall cost of doing business generally impacts grocery stores.”
He said the carbon tax is the easiest to point to because it’s the most visible tax. However, anything that increases the cost of the inputs needed to sell a product such as rent, energy and transportation will raise the price.
“The government adds a layer of cost to all of those things,” Wudrick said.
He said they could cut taxes if the government wanted to reduce customer costs.
He said global factors such as supply chain issues also play a role.
Statistics Canada reported that food prices rose 1.4% compared to 12 months ago. However, food inflation in Canada decreased for the fourth consecutive month in April, falling from 3% in March to 2.3% in April.
“We’re so used to seeing prices rise and still suffering from a bit of sticker shock that, even though the data says (inflation rates) subsiding, many Canadians are still convinced that they are rising pretty rapidly,” Wudrick said.
He doesn’t think corporate greed plays into the equation, however.
“If it was really just about grocery greed. Why did they only start doing it now?” he said. “When prices are stable or dropping, nobody suggests it’s because grocers are being less greedy.”
He also pointed to a price variation between stores and products to indicate that corporate greed isn’t the issue.
“There’s a dramatic difference in prices for the same products between a store such as Sobeys, Walmart, or Costco. Corporate greed can’t explain that,” Wudrick said. “It’s very tempting and easy to believe that, especially when these companies are making a lot of money and are not particularly sympathetic groups.”
The Leger study also asked Canadians what they thought about a grocery store boycott that targeted only Loblaws to reduce prices.
Most Canadians, 58%, supported the boycott of the grocery chain with the highest profits on the market, and 23% opposed it.
Despite being supported by a majority of Canadians Only 18% said they were partaking in the boycott themselves, and the same amount believed the boycott would help lower prices.
Though many support the boycott, 65% of Canadians felt like it would not affect food prices.
Wurdrick said Loblaw’s profits are much higher than those of other chains because it sells more than groceries.
“People need to remember, that as much as prices have gone up, the margins on groceries are quite slim,” he said. “When you look at a company like Loblaws, they are turning a profit. But they also own entities like Shoppers Drug Mart. They sell things like makeup. Makeup has a pretty large margin.”
He said it’s misleading to suggest they charge more for groceries because of greed when their drug store division, which sells more than just food, makes a large portion of their profits.
“Groceries are just not a very appealing sector to get into. And I think the evidence of that is we don’t have a lot of, companies that want to enter the marketplace,” Wudrick said. “If there was so much money to be made in groceries. You’d see other foreign companies coming here to get a piece of that.”
He said it’s interesting that shopping at a lower-priced location has become a boycott when it seems to him just to be “smart shopping behaviour.”
