The federal government’s efforts to bring together Canada’s food sector leaders for a summit aimed at tackling food inflation are “misleading” and unlikely to bear much fruit, a**lysts say.
Prime Minister Justin Trudeau announced Thursday that he would convene the heads of Canada’s largest grocers on Monday, calling for a plan to stabilize food inflation and warning that tax measures were on the table if Canadians continue to face to excessive suffering at the grocery store.
“It doesn’t make sense in a country like Canada that our largest grocery chains are making record profits while Canadians are struggling to put food on the table and we’re seeing record recourse to food banks,” Trudeau said.
Loblaw Chairman Galen G. Weston, Metro CEO Eric La Flèche and Walmart Canada CEO Gonzalo Gebara will all attend Monday’s meeting, spokespersons for the executives’ companies confirmed to PKBNEWS .
Representatives for Sobeys parent company Empire Co. Ltd. and Costco did not respond to requests for comment before publication deadlines.
The calls come as Canadians continue to face price hikes at the grocery store, even as overall inflation calms.
Statistics Canada’s latest consumer price index showed inflation was up 3.3 percent year-over-year in July, while food prices at the grocery store rose 8.5 percent. during the month. Although still high, this price increase has slowed from annual price increases of 9.1 percent in June and more than 11 percent last fall.
Sylvain Charlebois, director of the agri-food a**lysis laboratory at Dalhousie University, will also attend the meetings in Ottawa on Monday as an unpaid observer. He said it was not surprising to see Industry Minister François-Philippe Champagne intervene to combat food inflation, as the cost of living has currently become the “number one concern” of Canadians.
The Liberals have made a concerted effort to address affordability concerns for months, including announcing a so-called “grocery rebate” in this spring’s 2023 federal budget.
But since then, the Conservative Party has widened its lead over the Liberals in the polls.
An Abacus poll released Thursday shows the Conservatives have a 15-point lead over the Liberals, with affordability issues topping voters’ priorities.
In July, when the Conservatives first led the Liberals in an Ipsos poll, CEO Darrell Bricker told PKBNEWS it wasn’t a matter of the opposition gaining ground, but rather a growing “fatigue” with the Trudeau government.
“People are really not very happy with the direction the country is going right now and they’re putting a lot of the blame on the Trudeau administration,” Bricker said at the time.
Michael von Ma*sow, a food economist at the University of Guelph, told PKBNEWS his “cynical” view of the grocers’ summit is that it is a “vague” and “misleading” proposal aimed at to give the appearance of action on food prices.
“We see this government attacking the issue of affordability,” he said.
“It seems like this is a way to appease them, rather than something that will fundamentally affect affordability for Canadians.” »
What can the Grocers Summit accomplish?
Food executives may be an “easy target” for Ottawa, von Ma*sow said, but that doesn’t mean grocers themselves can solve food inflation with the snap of their fingers.
Grocers may be on the front lines of where Canadians are feeling price pressures, but he stressed that this doesn’t take into account the role played by other players in the supply chain and global factors such as the war in Ukraine.
“This will not solve the war in Ukraine or extreme weather events. Frankly, it doesn’t even address food prices up the value chain,” von Ma*sow said.
The Retail Council of Canada also argued in a statement to PKBNEWS that rising supplier costs are behind rising prices at grocery stores.
“Grocers are always willing to have good faith discussions with the government about our industry, food supply chain challenges or product affordability for Canadians,” the spokesperson said. Michelle Wasylyshen.
“But we will get nowhere with discussions that, again and again, fail to dig beneath the surface for the real cause of rising food prices. »
The Competition Bureau’s investigation into concentration in the Canadian food sector indicates that food inflation could be limited in the long term by promoting more competition in the market, but does not attribute responsibility for the current inflationary surge to Grocers’ profits.
Loblaw’s Weston also defended the company’s “reasonable profitability” in testimony before lawmakers earlier this spring.
In fashion now
NDP Leader Jagmeet Singh has proposed imposing a windfall tax on big businesses to discourage those that could take advantage of high inflation to price goug consumers.
von Ma*sow and Charlebois told PKBNEWS that if a windfall tax or other punitive measures were implemented, as Trudeau has hinted, it would likely not have the effect of lowering prices at the grocery store .
Charlebois said any additional tax burden imposed on grocers would likely be pa*sed on to consumers themselves, which would backfire on the federal government.
Trudeau’s tax threat could succeed in getting grocers to discuss what’s possible to improve affordability in the sector, he added.
From a public relations standpoint, Charlebois believes it would be wise for grocers to come to Ottawa.
“It would be ill-advised for the CEOs to miss the meeting. »
Food inflation expected to “fall significantly” anyway
Whatever concrete steps come out of the meeting with grocers, von Ma*sow and Charlebois said it’s likely that food inflation will continue to ease through the rest of the year.
While ongoing extreme weather events have fueled food inflation in recent months, last year’s inflation figures were hit particularly hard by Russia’s invasion of Ukraine, and Charlebois said that There were “no major surprises this year,” to repeat the observation. vivid price pressures of 2022.
Forecasts from the Agro-Food Analytics Lab predict that inflation will slow to between 5 and 7% before the end of 2023.
Charlebois said that by April or May of next year, the gap between headline inflation and food inflation should completely close, giving Canadians a little more peace of mind about their shopping bills.
“It’s an important issue because when people see that difference, that’s when they get really scared at the grocery store.” They see a big difference between what’s happening in the grocery stores and what’s happening in the economy,” he said.
Some grocers also expect pricing pressures to ease in the coming months.
Empire CEO Michael Medline said Thursday on a call with a**lysts about the company’s first-quarter results that he expects food inflation to “decline significantly” in the months to come. He noted, however, that the evolution of inflation was “choppy” and that consumers remained “nervous” regarding price sensitivity.
Making a public appeal to grocers to act on food inflation is, in this situation, a no-lose situation for liberals, von Ma*sow argued.
Either food inflation falls as expected and liberals can take credit because they are “putting pressure on the grocers,” von Ma*sow said, or if price pressures remain high, they can impose a tax and say they are monitoring the situation. consumer.
“To a large extent, I think it’s the government trying to say we’re doing something without providing a lot of detail to demonstrate convincingly that they’re actually doing something,” he said.
– with files from Sean Boynton, Kyle Benning, Saba Aziz of PKBNEWS