Expect some food prices to get cheaper next year — but typical grocery bills may still go up by $700
Closely watched report on food prices expects annual cost for family of 4 to top $16,000
Savvy shoppers should be able to find a few bargains at the grocery store next year, but even with prices for some essentials falling the typical Canadian family's overall grocery bill is set to increase by about $700 next year.
That's the main takeaway from a closely watched annual report on the food industry, the 14th version released Friday by Dalhousie University, University of Guelph, University of British Columbia and University of Saskatchewan.
Last year, as inflation was only beginning to rear its ugly head, the report predicted food prices would increase by between five and seven per cent in 2023.
As it turned out that was remarkably accurate, as Statistics Canada data shows the food component of the consumer price index has risen by 5.9 per cent in the past 12 months.
Every year, the report tabulates what an annual healthy grocery basket would be for a family of four: an adult man and woman, a teenaged boy and a preteen girl. Last year, lead researcher Sylvain Charlebois and his team forecasted that a typical family would end up paying $1,065 more for food in 2023, bringing the annual family tally to $16,288.40.
Consumers cutting back
Based on the increase in food prices, that prediction was more or less bang on. But while the report correctly forecasted the increase in what food would cost, it was off in terms of what ended up going into the grocery basket — mostly because consumers cut corners and ate less or downgraded to cheaper alternatives in order to pay for other higher family expenses.
As it turned out, that typical family ended up spending $15,595.40 on food this year, even as the price of individual items in their grocery cart increased.
"In other words, they spent $693 less due to changes in shopping habits — despite higher food prices," the report says.
Time will tell if the same impulse to cut back happens next year. For families who don't choose to simply eat less, this year's report is worth watching for its prognosticative track record. And on that front, the news is good.
"2024 will be a much friendlier year for consumers," Charlebois told CBC News in an interview. "We are expecting prices to go up, but in a more modest way for 2024."
Charlebois says staples like produce, meat and baked goods will still go up at an eye-watering pace, but there might be some bargains to be had in the middle of the store amid the packaged goods made by multinational conglomerates.
That's because those are the sections mostly controlled by multinational food conglomerates like Nestle, Tyson Foods, PepsiCo, Hershey, Kraft, General Mills, Kellogg and others.
Those companies were hit on all sides by inflation in the form of higher transportation and energy costs for manufacturing and shipping, higher prices for commodities like wheat and edible oils and labour costs from workers demanding higher wages.
The worst impacts of most of those factors are now in the rear-view mirror, which is why Charlebois thinks those are the aisles where bargains may be had.
"Dry goods, non-perishables — we are expecting an easier year just because the cost structure for consumer packaged good companies is much more stable right now," he said.
"They're already seeing some better prices for their ingredients and they're signing contracts for six to eight months from now," he said. "Will that help consumers? I think so because consumers have less cash than last year and so they're going to be looking for bargains ... and so grocers will have to follow."
For the most part, the odds of finding a bargain on a can of beans or bag of pasta are much greater than of finding one in the produce section or the meat aisle.
Prices for meat are forecast to increase by between five and seven per cent next year, and there's little relief to be found by filling up on vegetables instead.
"With produce, and in particular vegetables, we are expecting a weaker dollar which will actually make imports more expensive," Charlebois said.
Dairy and fruit are forecasted to go up by only between one and three per cent, while seafood is on track to be between three and five per cent more expensive. Despite increasing by eight per cent last year, baked goods are on track to increase by the highest amount in 2024 at between five and seven per cent.
All in all, food costs overall are forecast to be up by between 2.5 and 4.5 per cent, with the grocery bill for a typical family of four increasing by roughly $700 to just shy of $16,300.
While some of the underlying causes of food inflation are starting to dissipate, a number of unexpected events could derail the forecast. Chief among them would be geopolitical events such as Russia's invasion into Ukraine, or unforeseen climate events in major food producing regions.
Climate change is a "wild card" in terms of predictions, Charlebois says.
"We never know what to expect, unfortunately."
The same can be said of Canadians getting a glimpse of their grocery bill at the checkout line. While the prospect of easing inflation is a welcome one, it won't do much to improve the cost of living crisis underway.
Shopping for groceries in Toronto recently, shopper Joanna Galineas says she's trimmed everything but essentials out from her grocery budget, but it still isn't enough.
She downgraded from beef to less expensive cuts of meat, but now those too are on the chopping block.
"It has to go down to pastas now and just simple sauces instead of buying chicken just because of how costly it is," she told the CBC recently.
"[I worry] how I'm going to be able to afford everything, but I think it's like that for everybody."
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With files from the CBC's Nisha Patel and Shawn Benjamin