Food prices are on the rise in Canada, with Loblaw Companies Ltd. reporting a fourth-quarter profit of $529 million. Despite a drop in inflation in January, food prices continue to climb, with Canadians feeling the impact on their wallets. Loblaw’s strong financial results have raised concerns about the company’s profiteering during a time when grocery prices are accelerating at the fastest rate in over 40 years.
Canadian retailers are increasingly reliant on sales of essential items such as food and medicines, as rising prices force consumers to prioritize spending. Loblaw saw a 9.7% rise in retail segment sales, reflecting strong growth in its food and drug businesses.
However, Phoebe Stephens, an assistant professor of food security and sustainable agriculture at Dalhousie University, says that grocery retail in Canada is heavily concentrated, with about 80% of sales controlled by five major chains, including Loblaw. This lack of competition allows companies to raise prices more than they would be able to if there was greater competition, she says.
Several factors are putting upward pressure on food costs, including geopolitical events such as the war in Ukraine and climate-related disasters like a surge of avian flu in North America that is driving up poultry prices. However, Loblaw’s CFO Richard Dufresne says that the company is not taking advantage of inflation to drive profits.
Looking ahead, Loblaw expects its full-year 2023 adjusted earnings per common share to grow in the low double-digits. However, retail bellwether Walmart Inc. has forecast its full-year earnings below estimates, warning that tight spending by consumers could pressure profit margins.
In summary, while food prices in Canada continue to rise, the impact of market concentration and a lack of competition on driving up prices is up for debate.