Rising Food Prices: U of G Predicts Relief in 2014
December 03, 2013 - News Release
Consumers will get a small break at the supermarket in 2014, says a forecast by University of Guelph researchers.
Overall, food prices are expected to increase marginally next year. Based on the report, prices for staples such as cheese, eggs, milk and frozen vegetables may even decrease.
Greater competition is the main reason, said Prof. Sylvain Charlebois. He is lead author of the Food Price Index, an annual examination and discussion of Canadian retail food prices, which also includes restaurant prices.
“The Canadian retail market saw very significant changes in 2013,” said Charlebois, associate dean of research and graduate studies in Guelph’s College of Management and Economics.
For example, Target’s entry to Canada in early 2013 led retailers such as Wal-Mart and Loblaws to keep prices down.
Among major acquisitions in 2013, Loblaws took over Shoppers Drug Mart, and Sobeys acquired Safeway.
Last year, the Food Price Index predicted that new competition in Canadian food retailing would create a price war and eventually drive down food prices.
“We actually underestimated the impact of the competition in the market,” Charlebois said.
To meet higher competition, non-traditional grocery retailers such as drugstores often discount high-demand grocery staples as loss leaders, prompting traditional retailers to follow suit.
“This was evident in 2013, and this will likely continue into 2014. Price points could continue to drop for dairy and pasta products.”
Overall, the Guelph researchers predict general food expenditures will increase by between 0.3 and 2.6 per cent in 2014.
Only fish and seafood prices are expected to rise more quickly -- between 3 and 5 per cent.
“Much of the inflated prices are due to consumer demand for more healthier and ethical products,” said Charlebois.
Consumers and retailers are pressing fisheries to adopt sustainable practices. “We expect the impact of scarcity and responsibility will lead to higher prices for consumers.”
Predicted 2014 price changes for various foods:
• Meat: up 0.6 to 2.1 per cent;
• Dairy and eggs: down 0.6 to 1.5 per cent, due mostly to increased competition;
• Grains: up 0.2 to 2 per cent;
• Fruit and nuts: up 0.6 to 1.2 per cent; and
• Vegetables: up 1.4 to 2.1 per cent.
Restaurant food prices are expected to increase by no more than 2 per cent.
Canadian consumer consciousness of locally grown food and better nutrition will likely increase demand for premium products such as functional foods, omega-3 eggs and gluten-free items, but intense retail competition should keep prices down, the index says.
The index also predicts that major agricultural industry changes, such as the recent closing of the Heinz plant in Leamington, Ont., and new policies will have insignificant effects on food prices.
The 2014 Food Price Index also involved Guelph economics professor Francis Tapon; hospitality professors Erna van Duren and Michael von Massow; and marketing and consumer studies graduate student Warren Pinto.
Contacts:
Prof. Sylvain Charlebois
College of Management and Economics
519-824-4120, Ext. 56808
scharleb@uoguelph.ca
Prof. Francis Tapon
Department of Economics
519-824-4120, Ext. 52657
ftapon@uoguelph.ca
Prof. Michael von Massow
School of Hospitality and Tourism Management
519 824-4120, Ext. 56347
mvonmass@uoguelph.ca
Prof. Erna van Duren
School of Hospitality and Tourism Management
519 824-4120, Ext: 52100
evandure@uoguelph.ca
For media questions, contact Communications and Public Affairs: Lori Bona Hunt, 519-824-4120, Ext. 53338, or lhunt@uoguelph.ca; or Kevin Gonsalves, Ext. 56982, or kgonsalves@uoguelph.ca.
