Food inflation has been a source of concern for many Canadian consumers for a while in Canada. Based on our observations, the food inflation rate in Canada is close to 5 per cent. Many staples including meat, dairy, and groceries have increased in recent months due to macroeconomic shocks, caused by both unfavourable weather patterns in the Northern Hemisphere and logistical challenges due to the global pandemic. Our latest investigation, in partnership with Caddle, looks at how consumers are coping with higher food prices at retail. More than 10,000 Canadians were surveyed in the Fall 2021 about food prices, how they see prices, and what they are doing to cope with higher food bills.
Most Canadians have noticed higher food prices. A total of 86 per cent of Canadians believe food prices are higher than 6 months ago, however, some generational differences are noteworthy. While 93 per cent of Boomers believe food prices are higher than 6 months ago, 89 per cent of Gen Xers think the same. Fewer Millennials (79 per cent) and Gen Zs (68 per cent) believe food prices are much higher than 6 months ago. Based on these results, Boomers appear to have noticed rising food prices more so than other generations.
Meat is the category that most Canadians have noticed a difference in prices over the last 6 months. According to Statistics Canada, meat prices have increased by about 10 per cent in 6 months. Fruits ranked second, and vegetables third. When asked which is the one category which has increased the most, meat is by far the most popular option selected by Canadians, at 51.8 per cent, followed by groceries, at 15.7 per cent. According to Statistics Canada, Groceries have gone up in price by 8 per cent to 10 per cent in the last 6 months.
Vegetables and fruits are third and fourth. These results are interesting as fruits and vegetable have been slightly more expensive in the last 6 months in Canada.
Purchase decisions have been impacted by higher prices. For example, a total of 49 per cent of Canadians claim to have reduced their purchases of meat products in the last 6 months due to higher prices. Alberta (57 per cent) is the province with the highest rate of consumers who have decided to reduce their meat purchases due to higher prices. Both Quebec and Ontario have the lowest rate, at 46 per cent.
Many consumers are coping differently with higher foods prices. More consumers are now attracted to private labels, also known as house brands. A total of 37.5 per cent of Canadians are buying more private labels compared to last year. Weekly flyers and coupons are also becoming more popular with Canadians. A total of 41.6 per cent of Canadians are reading weekly flyers (paper-based, or digital) more often than in 2020. As for coupons (or e-coupons), 39.5 per cent of Canadians use them more often than in 2020.
Discounted products in stores are also attracting more attention than in 2020. A total of 39.6 per cent of Canadians are purchasing discounted products with expiry / best before dates within a few days of purchase more often than in 2020. A total of 26.9 per cent of Canadians are buying products with the “Enjoy tonight” label more often than in 2020.
A minority of Canadians will use their phones or use a calculator when grocery shopping. Only 22.3 per cent of Canadians will use their phones to check competitive pricing while shopping and 12.1 per cent will use a calculator regularly. On the other hand, 66.4 per cent of Canadians claim to know exactly how much they should be paying for food products before entering the grocery store. Surprisingly, while only 44.6 per cent stated that they follow a planned budget when grocery shopping, 26.9 per cent claim they will occasionally plan a budget for their grocery shopping.
Finally, “shrinkflation”, a strategy often used by the food industry to sell products with fewer quantities or volume at the same price, has been noticed by most Canadians. Almost 3 out of 4 Canadians (73.5 per cent) have noticed that some food products have shrunk, but prices have either remained the same or have gone up. Groceries is the one category where Canadians have noticed most “shrinkflation cases”, followed by bakery goods and meat products.
“We are aware that many consumers dislike such a strategy, believing it may be dishonest, especially right now”, said Dr. Sylvain Charlebois, Director of the Agri-Food Analytics Lab. “But on the flipside, from a food waste perspective, Canadians have historically bought too much food and have wasted a lot at home. Shrinkflation could be getting Canadians to waste less food at home.”