Why is inflation heating up at the grocery store again? Blame the loonie

A anemic Canadian dollar is being blamed arsenic a cardinal culprit down sticky ostentation astatine the market store, a inclination 1 adept says helium expects to persist heading into the holidays.

While wide ostentation has moderated successful caller months, settling backmost astatine the Bank of Canada’s 2 per cent target successful October, consumers are erstwhile again feeling the pinch connected groceries.

The yearly outgo of nutrient bought from the store roseate 2.7 per cent annually past month, accelerating from a complaint of 2.3 per cent successful September. October marked the 3rd consecutive period grocery prices outpaced the remainder of the user handbasket tracked by Statistics Canada.

Driving those costs higher successful October were much costly caller vegetables and fruit, which roseate astatine yearly rates of 7.3 per cent and 7.6 per cent, respectively.

Pain astatine the market store is thing caller for Canadians. As Canada grappled with decades-high ostentation implicit the past fewer years, market prices were among the largest contributors.

Ipsos polling conducted exclusively for Global News successful precocious August recovered that 43 per cent of Canadians are disquieted they mightiness not person capable wealth to provender their families.

Prices connected nutrient bought from stores roseate implicit 20 per cent implicit the 3 years betwixt July 2021 and June 2024, according to StatCan.

That accelerated emergence helps to explicate wherefore Canadians are inactive feeling “sticker shock” astatine the market store, explains idiosyncratic concern adept Rubina Ahmed-Haq.

“When we spell to the market store, we inactive person caller representation of what avocados cost, what a loaf of breadstuff costs, what a carton of eggs costs,” she says.

“It’s inactive thing that we’re getting utilized to, that prices are present to enactment astatine this level. They conscionable aren’t expanding arsenic aggressively year-over-year.”

The acute symptom of nutrient ostentation successful caller years is 1 of the justifications Prime Minister Justin Trudeau cited this week successful announcing the Liberal connection for a two-month GST/HST “holiday” applying to galore communal market items.

Sal Guatieri, elder economist and manager astatine BMO Capital Markets, tells Global News that, successful opposition to the planetary bout of ostentation from the past fewer years, today’s terms jumps astatine the market store are not needfully universal.

In Canada, portion market ostentation was up 2.7 per cent successful October, the latest figures from the United States amusement nutrient prices were up conscionable 1.1 per cent annually.

Guatieri says there’s a fewer reasons wherefore nutrient ostentation looks antithetic connected either broadside of the border, but the astir glaring possibly is the anemic Canadian dollar and surging spot of the United States’ greenback.

The loonie fell beneath the 71-cent people compared to the U.S. dollar to commencement this week, marking a four-year debased earlier recovering somewhat.

Guatieri says this differential is felt peculiarly hard astatine market stores successful Canada, peculiarly successful the colder upwind seasons erstwhile overmuch of the caller nutrient Canadians devour is imported from the U.S.

Import prices for nutrient person been increasing “quite strongly,” Guatieri says, rising 14 per cent successful the past year.

Canadians are apt feeling the compounding effect of a anemic loonie and drought earlier successful the twelvemonth connected beef prices, helium says, with the second reducing cattle stocks and limiting supplies of beef coming from southbound of the border.

Guatieri says consumers tin besides expect prices to emergence a spot sharper heading into the extremity of the year, peculiarly up of the vacation play erstwhile Canadians are buying and eating much nutrient than usual.

“They observe more, surely with friends and family. And truthful the request for nutrient products, particularly astatine the market store, tends to spell up,” helium says.

While the Canadian dollar has been flailing against its American counterpart for good implicit a year, overmuch of the loonie’s weakness tin beryllium traced to the results of the U.S. statesmanlike election.

Donald Trump’s looming 2nd medication comes with threats of broad tariffs connected trading partners and different economical policies aimed astatine stimulating maturation successful the U.S. While it remains to beryllium seen what run promises volition go argumentation erstwhile helium assumes bureau successful January, Guatieri says that the wide risks of a Trump presidency thin much towards higher inflation.

That’s important for the U.S. Federal Reserve, which looks astatine wherever ostentation is heading arsenic it sets its benchmark involvement rates. Expectations that the Fed mightiness not chopped arsenic overmuch arsenic antecedently expected are important for mounting currency speech rates — the differential betwixt the Bank of Canada’s argumentation complaint and its counterpart successful the U.S. affects the worth of the loonie.

With the Bank of Canada getting a headstart connected the Fed successful its rate-cut cycle, the 2 cardinal banks’ argumentation rates basal astatine a wide differential, discouraging investors from piling into the loonie and alternatively pushing them to comparative information successful the U.S. dollar.

BMO notes that portion of the loonie’s betterment this week came from reined-in expectations for the Bank of Canada’s ain gait of complaint cuts, which came from an upside astonishment to ostentation and immoderate absorption to the Liberal stimulus proposals.

But Guatieri says that a Trump presidency is inactive apt to beryllium atrocious quality for the Canadian dollar.

“That does suggest the Canadian dollar could beryllium connected the antiaircraft for rather immoderate time,” helium says.

Ahmed-Haq says determination are a fewer strategies Canadians ought to employment oregon revisit erstwhile they caput to the market store, adjacent if terms hikes aren’t successful the double-digits anymore.

For one, making a database and doing an inventory of what you request — and what you already person — earlier heading to the market store is captious for avoiding nutrient waste, peculiarly connected perishable items that tin beryllium speedy to spell bad.

“When you propulsion things out, that is truly throwing wealth successful the garbage,” Ahmed-Haq says.

She besides recommends avoiding putting excessively overmuch absorption connected grocers’ loyalty programs. While 1 loyalty programme tin beryllium helpful, if shoppers are visiting aggregate stores and are enrolled successful galore antithetic rewards schemes, it tin dilute the effectiveness of immoderate savings.

Instead, Ahmed-Haq recommends those who unrecorded adjacent discount chains instrumentality vantage of those, wherever little prices tin often beryllium recovered astatine the disbursal of wider selections.

“Price inactive trumps everything,” she says.

— with files from Global News’s Anne Gaviola