Bank of Canada says food price increases to outpace inflation

The cost of food in Canada is likely to continue growing at inflation-busting rates in 2022 thanks to supply disruptions and higher commodity and energy prices

Prices for food bought in stores are up nearly 6% year over year, a 10-year high. Prices for bacon and beef rose by 19% and 12% respectively while margarine posted an 18% gain.

 

“Bank of Canada expects that food price inflation will be above its historical average over 2022,“ 

 

“These increases in food prices will likely continue. As a result, the Bank of Canada expects that food price inflation will be above its historical average over 2022,” it said in the January Monetary Policy Report.

Overall Canadian inflation is expected to peak at around 5% in early 2022.

The central bank identified three major reasons for the likely continued increase in food prices:

• domestic prices for agricultural commodities have recently increased significantly, thanks to unfavorable weather conditions
• supply chain disruptions have hit food processors’ productivity and driven up unit costs
• higher energy costs are putting upward pressure on distribution costs