Canadian Food Inflation: International Dynamics and Local Agency

With Mike von Massow. DOI: 10.1111/cjag.12341. Coverage: BMO Sustainability Leaders podcast

We offer a descriptive analysis of the complexities surrounding food price inflation in Canada three years after the outbreak of COVID-19. The Consumer Price Index and its food component have registered significant shifts since 2020 and remain elevated. This behavior is influenced by international dynamics, such as the conflict between Russia and Ukraine and the consequent commodity price surges, and domestic factors, including grocery market concentration. As external events interact with local policies, business practices, and the structure of the food retail industry, debates around market competition intensify. We posit that while the influence of international factors on local prices is undeniable, fostering domestic grocery competition remains crucial. At the same time, managing expectations of major price reductions in a small open economy like Canada’s is important. In addition, we discuss some of the research and data needs that have become salient during the current inflationary episode.