Fruit and vegetable prices hike overall food costs

Fruit and veggie lovers have seen their pocketbooks pinched over this past year as the precious produce spiked in price, prompting an overall increase in food costs.

"Well, obviously the weak loonie has had an impact on produce and fruit prices," said Sylvain Charlebois, professor of marketing and consumer studies at the University of Guelph Food Institute. "They've gone up significanty."

• Beef prices begin sudden fall from record highs
• Higher food and gas prices push inflation to its highest level since 2014
• 7 foods that will cost you more in 2016 and why

According to the Consumer Price Index, released by Statistics Canada on Friday, food prices increased by four per cent in January 2016, compared to the same month a year earlier. But fresh vegetables were up 18 per cent over that period, while the price of tomatoes alone shot up 30 per cent from the previous month.

Lettuce was up nearly 18 per cent in January, compared to a year earlier, while other fresh vegetables, including broccoli, cauliflower, celery and peppers, registered their largest year-over-year increase since April 2009, rising 23 per cent over the previous year.

Fresh fruit was up nearly 13 per cent for the year, with apples rising 16.6 per cent and oranges 11.

'Driven by the weakened currency'

"Clearly many importers had to procure some produce outside of North America and that really increases transportation costs," Charlebois said. "Peppers — we've had to go to Europe to get some of those products — so that's why some products have increased by more than 30 per cent in a month."

"We are importing a lot of fruits from abroad," and the high prices are really driven by the weakened currency, he said.  "As contracts are renewed, we're going to see that percentage drop over the next little while. It will not gain momentum."

Michel Sekimonyo, an analyst at Statistics Canada, said a supply disruption caused by a lack of rain in California also affected the price of imported produce.

"That has impacted the amount of available vegetables in the market," he said.

Sekimonyo also noted that some of those monthly increases, like the spike in the cost of tomatoes, can be attributed to the seasonal nature of the product.

Curiously, potatoes recorded a five per cent drop in price. But Sekimonyo said that may be related in part to last year's consumer scare, after metal objects were found in some potatoes in Nova Scotia and P.E.I.

However the price of spuds picked up in January, rising 2.6 per cent from December.

Meanwhile, the price of meats rose two per cent in January, compared to a year ago, with fresh and frozen beef increasing by four per cent. 

Sekimonyo said there were large increases in meat prices between January 2014 and January 2015, which were followed by a slowdown in 2015. Over the past three months, the price of fresh and frozen beef has consistently fallen, he noted.

Increased beef production

"Higher prices has motivated farmers to increase their production of beef, that's what we're seeing now," Sekimonyo said. We're "seeing an increase of supply built up between 2014 to 2015 coming into the market."

Charlebois also noted that there has been softening of prices at the meat counter in both beef and chicken.

"Pork is still going up but we don't expect that to continue. Looking at hog futures, prices are likely to remain the same or drop slightly over the next few months," he said. "The good news for barbecue enthusiasts is we're not expecting beef prices to move up anytime soon. They could actually go lower, but it's hard to tell how much."

The CPI also found that the cost of meals in restaurants was up 2.5 per cent in January, compared to the previous January, but just up slightly from the month of December. 

In December, a research team led by Charlebois published a study predicting that found food inflation rates will be two to four per cent in 2016.

The average Canadian household spends $8,631 on food, which means the average household could spend up to $345 more on food in 2016, the study found.

But Charlebois said on Friday that these costs could be offset by the two per cent rise in inflation, which would put pressure on both the private and public sector to raise wages.

"It means the margin between the food inflation and general inflation is shrinking," he said. " You may see other items go up in price and wages will go higher ...  and actually  give some breathing room to consumers to spend some money."

With energy costs much lower than last year, there's likely been a lot of shifts in the family budget from energy to food, he said.

"If you own a car you're saving about $1,000 on gas compared to last year. That's way more than how much more food is costing compared to last year."