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You might have noticed lately that despite nothing changing in your ability to bring home the bacon … bringing home actual bacon has gotten more difficult. Statistics Canada reported that the inflation rate rose to a whopping 8.1%1 in May -- the highest it's been since 1991.
That spike is hitting food even harder with store prices up an average of 6.5% year over year. Certain popular items are facing even higher increases. Case in point: Bacon saw an increase of 19% in 2021.2
That's enough to make you give up on brunch entirely.
Unfortunately, this trend towards higher prices isn't expected to ease anytime soon. The Food Prices Report for 20223, created by researchers at Dalhousie University, the University of Guelph, the University of Saskatchewan, and the University of British Columbia, projects an increase in food costs of 5% to 7% in 2022 with provinces like Alberta, British Columbia, Newfoundland and Labrador, Ontario, and Saskatchewan facing even higher increases.
How are Canadians coping? Angus Reid reports4 that 62% of Canadians are eating out less, 46% are switching to cheaper, lower quality brands, 30% are cutting back on meat, and 21% are cutting back on fresh fruit and vegetables. For the 4% who still aren't able to cope, the food bank has become an essential source for groceries.
As buying the same things you did just last year becomes much more difficult for many Canadians, it's not surprising that many are shifting their habits. But before you start growing all your own food on your balcony or in your backyard (and using the extras to supply the local food bank), it's important to understand what's going on, how long it's likely to last, and what impacts it might have on your food costs.
If you're like most Canadians, you probably followed the Great Potato Chip Debacle of 20225, a pricing standoff between Frito-Lay and Loblaws that saw Doritos and Cheetos disappear from Loblaws shelves after Frito-Lay cut the retailer off after attempting to negotiate a price increase (though you'll be happy to know the popular snacks returned to store shelves in April). The chip company claimed they were facing, “unprecedented pressures from rising costs of items, including ingredients, packaging and transportation."
Nothing good ever seems to come after the word unprecedented.
Scotiabank economists predict it will stabilize by 2023 to 2.5% year over year – still above the central bank's target of 2% but much closer to the target's mark.
And it's the right word in this case – there isn't really another time in history where the world faced the same macroeconomic issues it's currently experiencing. Part of this comes from rising energy costs affecting shipping and there have also been problems with growing conditions in certain regions in Canada or globally.6
This unique bout of inflation is primarily the effect of COVID-19. Supply chain challenges caused by production and shipping backlogs from lockdowns and quarantines, are what's causing most of the inflationary pressures through supply shortages – and higher prices on the fewer supplies available. With food prices, changes in prices on one product can impact input prices on a number of other products which in turn increases consumer prices. Leading to more expensive chips.
How long should you expect high inflation to last? Scotiabank economists predict it will stabilize by 2023 to 2.5% year over year – still above the central bank's target of 2% but much closer to the target's mark.
That said, there's a chance things might get worse before they get better.
The above predictions didn't fully take into account the potential impact of the conflict in Ukraine – which could bring about a global wheat crisis. Turns out 13.5 million tons of wheat and 16 million tons of corn7 from 2021's harvest are currently sitting in warehouses in Ukraine and Russia.
Maximo Toreror, the chief economist at the Food and Agriculture Organization, told the BBC in March7 that he expects wheat prices could go up another 8.5% in 2022.
The economic impact of such an increase would ripple through the economy affecting the prices of other things, especially meat since grains are a key input in meat production. Which would lead to … you guessed it … more increases in the price of bacon.
Angus Reid's report that many Canadians are switching to cheaper brands and changing up their food buying habits gives you a sense of how others are navigating high food inflation. How your household shifts your food consumption will depend on what would work best for you.
You could decide to buy extra flour now before the price increases and return to the bread baking hobby you developed early in the pandemic so you can meet all your carb needs no matter how high wheat prices get. You could also decide to eat less of it for a while. Or buy it now and freeze it. Or just become a vegetarian.
Growing your own produce is always a good idea – as is dropping off any extra to the local food bank or sharing it with low-income neighbours and friends who are struggling with food inflation more than you. But not everyone has a green thumb and it can take a while to get good at growing those sun warmed tomatoes your gardener friends post pics of on Instagram.
Worried about food shortages in other countries? There's a number of charities that you could make a donation to like the Red Cross or Oxfam.
And what about that pain at the checkout now that you know it's not going away anytime soon? You could leverage your points cards to earn Scene+™ rewards that will help ease the pain in other areas of your budget. Here's how our cards can help:
- Scotiabank® Scene+™ Visa* Card: With this no annual fee card you can earn 2 Scene+™ points for every $1 you spend at participating grocery stores, Home Hardware, and Cineplex, and 1 point for every $1 you spend on all other eligible everyday purchases.
- Scotiabank American Express® Card: This card comes with no annual fee, and you can earn up to three Scene+™ points on eligible grocery, dining, entertainment, streaming, gas and transit purchases.
- Scotiabank Gold American Express® Card: With this card, you earn up to six Scene+™ points for every $1 you spend on eligible grocery purchases, and three Scene+™ points for every $1 you spend on eligible gas and daily transit purchases.
- Scotiabank Passport™ Visa Infinite* Card: Pay no foreign transaction fees when shopping internationally online or while traveling. You can also earn up to three Scene+™ points for every $1 you spend on eligible grocery, dining, and entertainment purchases.
What could you do with all the Scene+™ points you'll earn? They're redeemable towards travel, shopping, entertainment, dining, banking, and more – something that will greatly help you navigate all this current inflationary stress.
While cutting back or changing your food buying habits is never fun, just remember that it's temporary. Food prices are eventually expected to stabilize and incomes are expected to catch up.
And when they do, you can eat all the bacon and name brand chips you want. Long live brunch and snacking!
