The drop in oil prices may seem like a good thing, but what you’re not paying at the pump, you will likely end up paying at the grocery store.
Especially if you like your fruit and veg, because the price for anything that comes from down south is going up.
The University of Guelph’s Food Price Report for 2016 predicts Canadians will see an average increase of 2-4% on their grocery bills this year.
Simi Sara spoke with Kevin Grier, an agriculture and food market analyst, to find out more how we’ll be impacted.
He says it’s not just fruits and vegetables, it’s also meats and cereals, and even ketchup. Essentially anything we import from the states is up in price.
“Instead of costing a dollar a year, that is now a dollar thirty, dollar forty.”
Commodities, the dollar and competition
He says that while the dollar is one of the top things that influence food prices, the cost of commodities themselves are also important.
“In other words, cattle and hogs, corn and grain and wheat and all those kinds of things. And those things are actually down this year compared to last year – and in some cases down significantly. And that is a direct relationship to the price of food.”
The third factor is the level of competition between grocers.
“If they’re competing hard against each other, prices will be kept in check.”
With that in mind, Grier says the only one that’s forcing food higher is the dollar, and we might actually see more healthy competition as retailers try to increase their market share.
The trouble is always in the transition phase
This is the worst time to predict where prices will settle because it’s so hard to predict where the loonie is going.
“(It’s) when the buyers at the grocery stores, the meat buyers, the produce buyers are literally pulling their hair out right now trying to cover their costs on a week to week basis.”
But he says with lower commodity prices and the likelihood of more competition from Walmart and Costco, he predicts the rise in price will be on the low end of the 2-4% increases that are predicted.
The takeaway? Eat more meats, corn and grains
“The commodities on meat and the commodities on corn and a lot of these ingredients that go into cereals and so on, are low. You know, they’re abundant and they’re low.”
LISTEN to the complete interview on rising food prices: