Canadian families to spend $1000 more on food next year

The reality of food inflation is not going away any time soon for Canadians.

Canada’s Food Price Report 2023 was released Monday and predicts families will spend up to $1000 more on food next year.

Grocery costs are expected to rise seven per cent with a family of four’s total annual grocery bill estimated to be $16,288 in 2023.

That is an increase of $1,065 compared to this year.

Food inflation is set to remain stubbornly high in the first half of 2023 before it starts to ease, said Sylvain Charlebois, lead author of the report and Dalhousie University professor of food, distribution, and policy.

“When you look at the current food inflation cycle we’re in right now, we’re probably in the seventh-inning stretch,” he said in an interview. “The first part of 2023 will remain challenging… but we’re starting to see the end of this.”

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The report said multiple factors could influence food prices next year, including climate change, geopolitical conflicts, rising energy costs and the lingering effects of COVID-19.

Vegetables could see the biggest price spikes, with estimates pegging cost increases will rise as high as eight per cent, the report said.

“The produce section is going to be the wild card,” Charlebois said. “Currency is one of the key things that could throw things off early in the winter and that’s why produce is the highest category.”

Currency fluctuations also play a role in food prices with a weaker Canadian dollar making importing goods like lettuce more expensive.

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

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

“The western U.S., particularly California, has seen strong El Nino weather patterns and droughts and bacterial contaminations, and that’s impacted our fruit and vegetable suppliers and prices,” said Simon Somogyi, campus lead at the University of Guelph and professor at the Gordon S. Lang School of Business and Economics.

Prices in other key food categories like meat, dairy and bakery are predicted to soar up to seven per cent, the researchers found.

The Canadian Dairy Commission has approved a farm gate milk price increase of about 2.2 per cent, or just under two cents per litre, for Feb. 1, 2023.

Seafood is expected to increase up to six per cent, while fruit could increase up to five per cent, the report said.

Rising prices will push food security and affordability even further out of reach of Canadians a year after food bank use reached a record high.

The increasing reliance on food banks is expected to continue, with 20 per cent of Canadians reporting they will likely turn to community organizations in 2023 for help feeding their families.

Last year’s report predicted food prices would increase five to seven per cent in 2022, the biggest jump ever predicted by the annual food price report.

Food costs actually far exceeded that forecast. Statistics Canada says grocery prices were up 11 per cent in October compared with a year before while overall food costs were up 10.1 per cent.