Food prices expected to keep rising in 2023 amid biggest inflationary wave in 40 years

Headwinds of inflation are still blowing hard in the faces of Canadians, this time striking at a basic necessity of life: food. A new national report forecasts more increases in food prices in 2023, leading to Canadian families paying an extra $1,000 or more on feeding themselves.

Canada's Food Price Report 2023, a cross-country annual study carried out by Dalhousie University, the University of Guelph, the University of Saskatchewan, and the University of British Columbia, predicts that food prices will see five to seven per cent increase in 2023.

The results mean that an average family of four will spend, in the report's calculations, up to $16,288.41 per year on food, an increase of $1,065.60 from 2022. A single woman in her 40s will pay about $3,740 for groceries next year while a single man the same age would pay $4,168, according to the report and Statistics Canada.

For a family of six, we are estimating the cost for groceries next year to be a little over $21,000," said Stuart Smyth, an University of Saskatchewan associate professor and one of the report's authors.

Lower-income Canadians will feel the greatest impact, he added, warning that some households could be forced to make very difficult decisions" as to how to best feed their families. I worry that as food prices continue to rise that people won't be getting as much nutrition as they require for a healthy diet," Smyth told the Star.

Canadians haven't seen anything like the ongoing inflationary wave in decades: We haven't seen food prices increase this high in Canada for over 40 years," said Simon Somogyi of the University of Guelph.

The report notes that its previous edition also predicted food inflation of five to seven per cent in 2022, but the final annual number came in at 10.3 per cent. The authors cite unforeseen factors including Russia's invasion of Ukraine, higher interest rates, and escalating energy costs."

To say that it's been a challenging year for Canadians at the grocery store would be an understatement," said Sylvain Charlebois, project lead and director of the Agri-Food Analytics Lab at Dalhousie University.

The surge in food prices is, like the inflation seen in other goods, seen to be linked to several ongoing domestic and international factors, including the war in Ukraine, supply-chain issues, worker shortages and the Canadian dollar declining relative to the U.S. dollar.

Earlier this year the loonie was worth more than 80 cents U.S., but it then dropped to a low of 72.17 cents in October amid a strengthening U.S. dollar. It has hovered near the 74-cent mark in recent weeks, ending Friday at 74.25 cent.

In addition to currency risks for 2023, much of the produce sold in Canada comes from the United States, which has been struggling with extremely dry conditions.

Food categories seeing five to seven per cent increase next year include meat, dairy and baked goods, according to the report. For those wanting to go vegan, vegetable prices are anticipated to jump six to eight per cent.

The surge in prices is changing grocery shopping habits: The report finds that many Canadians looked for saving money by using coupons, reading weekly flyers, seizing on discounts and using food-rescue apps, which offer staples nearing their best-before date.

Food banks, for their part, registered 1.5 million visits in March 2022, making it the highest March use in history, the report said, citing data from the Food Banks Canada.

But the price increase expected for 2023 is less than the rise seen this year. That may be cold comfort for Canadians, as food prices are already high, but if inflation can come down, it's possible that we could see price increases for 2023 at or below five per cent," according to Somogyi.

In addition to changing shopping habits, consumers can look for alternatives to expensive food, such as frozen produce, plant-based proteins, and buying meat when it's on sale and freezing it.

Consumers will continue to get smarter about grocery shopping as they navigate through this so-called food inflation storm," said Charlebois.

With files from The Canadian Press