Canadian food suppliers expect inflation to cause more grocery store price hikes

Letters from food suppliers to grocery stores say food prices will likely increase in the fall — on top of the already double-digit percentage increase in food costs during the pandemic.

Dairy goods are expected to climb. The Canadian Dairy Commission's (CDC) approved a second milk price increase "which will see farm gate milk prices go up about two cents per litre, or 2.5 per cent, on Sept. 1," reports BNN Bloomberg.

Dairy companies also plan to add their own price increase, thereby "piggybacking" off of price hikes. Lactalis Canada told customers it will implement an average national market increase of five percent in September, which it attributes to "significant inflationary costs" and the CDC's pricing increase.

Consumer price inflation has seen record increases, with prices in May rising 7.7 percent last month, up from the 6.8 percent increase seen in April, according to government data.

A recent poll found that many Canadians have taken measures to cut costs by swapping products or cutting down on certain sectors of their budget.

More than a quarter of Canadians will cut back on essentials such as food, utilities, and housing. Nearly half will cut back on non-essentials like travelling, dining out and entertainment.

According to that poll:

• six in 10 say they’re already feeling the effects of interest rate increases (59%, +7pts).
• Nearly half say they’re cutting back on non-essentials such as travelling, dining out, and entertainment (46%).
• A third are buying cheaper versions of everyday purchases (37%) and driving less (30%).
• More than a quarter are cutting back on essentials such as food, utilities, and housing (27%).