Food prices are still rising while inflation is dropping. Here’s why

Political scientist Sarah Martin says the food supply chain is shaped more like an hourglass, rather than a straight line.

At the top of that hourglass is a group she calls the “feeders,” or the food producers. The “eaters,” or consumers, are on the bottom. 

In the middle, where the hourglass is pinched, are corporations. 

“These corporations have a remarkable amount of control,” Martin told CBC News on Monday.

The associate professor said the big grocers and food companies are part of the reason as to why food prices continue to rise, even while inflation and energy prices are dropping.

Canada’s inflation rate dropped to 1.7 per cent in April, mainly driven by the removal of the consumer carbon tax, according to Statistics Canada. 

Meanwhile, another Statistics Canada report released earlier this month says the cost of food purchased from stores rose by 3.8 per cent in April compared to last year. 

Martin says companies are being defensive against economic shocks like that.

One of the largest contributors to the year-over-year acceleration was fresh or frozen beef, which increased by 16.8 per cent according to the report.

“Meat is an interesting market,” Martin said. 

She said it’s unique because there are only a handful of major players in the North American meat business, but also because animals can move across the Canadian and American borders “quite a bit.”

In many cases, livestock are raised in Canada and then shipped to the United States for subsidized feed and slaughterhouse labour, and then the product is sent back to Canada.

“Decades of free trade have created these really tangled webs,” Martin said.

It’s become an even bigger tangle since U.S. President Donald Trump launched a global trade war, imposing tariffs on various meat products like beef and pork. The economic uncertainty that resulted leads to some sticker shock for those at the bottom of the hourglass.

Uncertainty is bad for business, as Martin puts it. 

“When there’s an economic shock and the business climate is unpredictable, prices often rise,” she said.

“With that kind of market control, you can see that kind of corporate concentration — that pinch in the hourglass. You can see how sellers’ inflation can move along very quickly.”

Martin added that any increase in food prices worsens an “already alarming level of food insecurity” in the province. 

Lesley Burgess is executive director of the Bridges to Hope food bank in St. John’s. She says her organization is constantly aware of the cost of supplies. 

Bridges to Hope serves about 1,400 people a month, according to Burgess. The team has been trying to find creative ways of addressing food inflation to maintain their level of service.

“Now is not the time to pull back or to reduce the amount of food that we’re distributing,” Burgess said. “Even if our food bank is also, you know, feeling that pinch.”

The organization implemented a choice model in March, and Burgess said that’s helping. 

Clients are able to choose which items they need at a given time instead of taking home pre-packaged hampers. The food bank’s executive director said the new model helps to provide people with food better suited to their needs and preferences— and it helps Bridges to Hope make the best use of its resources.

Burgess said Bridges to Hope spends about $18,000 every month, and she’s noticed that some of the regularly purchased items have increased in price as much as 25 per cent since December.

She’s still expecting a high demand leading into the summer months.

“Every morning that we’re open, which is four mornings a week, we’re serving anywhere from 70 to 100 people,” said Burgess. “Our job is to make sure that we’re getting the best quality of food for the best price.”

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