Canadian consumers should expect to see more food price increases across the supermarket network this year, the country’s third-largest food retailer Metro has predicted.
“We do expect some cost increases to be processed through the system starting in February,” Eric La Flèche, president and chief executive officer of Metro, told analysts on a conference call.
So far, continuing competition on the Canadian retail market has managed to keep a lid on price hikes, according to a report in the Toronto Star, as Wal-Mart plans 40 new outlets this year while Target is on course to open up to 150 stores in the country by 2014.
A higher Canadian dollar has also helped, making imported fruit and vegetables cheaper for supermarkets, Kevin Grier, an analyst with the George Morris Centre, a food policy think tank, in Guelph, told the publication.
Mr La Flèche said the increases will occur across the food industry, as other multinational food processors and restaurant operators, from General Mills to McDonald’s, warn that price increases are coming as their costs rise.
Currently, the food price index in Canada is up by just 1.7 per cent compared with 2010, Statistics Canada said this week, compared with the 25 per cent increase in international food prices, according to the Food and Agriculture Organization of the United Nations.
“The consumer remains cautious,” La Flèche said. “As retailers we’re feeling that because we’re giving them a lot of promotions. They have opportunities to cherry pick. With high unemployment, high debt levels, people are trying to save every which way they can.”
Despite consumers’ sentiment and the added competition from new entrants, the Toronto Star said food industry analysts believe Canada’s supermarket operators will be able to pass some cost increases on to customers.
“Two-thirds of the grocery market in Canada is controlled by three companies and they have a very strong position in each of their respective areas, which gives them some pricing power,” Donald Marleau, an analyst with Standard & Poor’s Canada, explained to the newspaper.
