2024 to bring slower food inflation as prices continue to moderate: report
Rosa Saba, The Canadian Press
Published Thursday, December 7, 2023 7:13AM EST
Last Updated Thursday, December 7, 2023 7:13AM EST
Food prices will keep rising in 2024, though at a slower pace, according to the latest Food Price Report.
The 14th annual report by Dalhousie University, the University of British Columbia, the University of Guelph and the University of Saskatchewan predicted that food prices will rise between 2.5 per cent and 4.5 per cent next year as inflation continues to moderate.
However, grocers will be in fierce competition next year to try and win back loyalty from customers who have been shopping around more to try and save money, said project lead and director of Dalhousie's Agri-Food Analytics Lab Sylvain Charlebois.
“I think loyalty is going to be a huge battleground,” he said.
This competition could lead to mild deflation on the prices of some essential food items, he said, even as overall food prices will continue to rise.
“How do you get people to come back? (With) rebates, discounts. And that leads to price wars.”
Some categories are predicted to experience faster price rises than others in 2024.
Bakery, meat and vegetables are forecast to see prices go up the most, at between five and seven per cent, the report said. Prices at restaurants and for seafood products will rise between three and five per cent, while dairy and fruit will see prices rise between one and three per cent.
But despite the continued rise in food prices this year, researchers for the report found that in 2023, customers actually spent less in dollar amounts than last year’s report predicted, as they cut back on spending at restaurants and at grocery stores.
The estimated total annual spending tally in 2023 for a family of four —two parents, a teenage boy and a pre-teen girl — was $15,595.40, almost $700 less than last year's report predicted.
This finding was “a bit of a shocker,” said Charlebois. While it was expected that Canadians would cut back on spending as shelter costs went up amid interest rate hikes, the scale at which they cut back was a surprise to the researchers, he said.
“It points to how extremely challenging 2023 was to a lot of people,” he said.
“Interest rates went up so quickly, it didn't give time for households to adapt.”
The report predicted that same family of four will spend around $700 more on food in 2024 than they did this year, an estimated $16,297.20.
In 2024, the outsized food inflation that’s persisted for the past few years will finally come to an end, Charlebois predicted, returning to a more normal level as overall inflation does the same.
The Bank of Canada hit pause on interest rate hikes in the final months of the year as its policy continues to work its way through the economy. Inflation isn’t yet at the central bank’s target rate, hitting 3.1 per cent in October, but is a far cry from its peak of 8.1 per cent in June 2022. Grocery inflation, meanwhile, was at 5.4 per cent in October, lower than September but continuing to be elevated compared with the overall inflation rate.
Climate change is expected to continue influencing the prices of some food items in 2024, the report predicts, especially as climate-related events become more frequent and hit harder.
Right now, climate events are affecting the prices of three food products in particular, which Charlebois said will likely continue to rise in the coming months.
Firstly, beef prices are on the rise as drought in the Midwest and prairies has led farmers to cull their herds, said Charlebois.
Meanwhile, the price of cocoa is being driven up by conditions in Ghana and the Ivory Coast, while the price of sugar is rising due to weather affecting sugarcane production in some countries, Charlebois said.
“If you like dark chocolate, I would buy it now.”
This report by The Canadian Press was first published Dec. 7, 2023.