CANADA
Canadian shoppers may soon be seeing a spike in prices, especially for meats, at their local grocery store if the dollar continues to weaken. It’s inevitable, say leading experts in food distribution and policy. And if indications of a slowing economy are a sign of things to come, the Canadian dollar, which is already at its lowest level since October 2009, may continue to drop.
“We saw weak trade, weak manufacturing and the central bank following up by saying we have no timeline to raise rates any time soon,” said Brad Schruder, director of foreign exchange at Bank of Montreal. “That’s like the trifecta of death for the loonie.”
The increase in prices won’t just affect consumers either. Grocers in Canada today are reluctant to pass price increases along to consumers due to fierce competition in the sector, according to Toronto Star. With big-name retailers like Walmart, Costco, and Target continuing to expand and renovate their stores to add larger grocery selections, consumers will be tempted to find the cheapest selection wherever they can. If one retailer raises the price, the competition may feel that they can gain a competitive edge over the others by not raising their prices. In the end, retailers may feel as though it might not be worth raising prices at all to keep the competition on a level playing field.
If the loonie does happen to go up again sometime within the next week or two weeks, this may be a non-factor, says Sylvain Charlebois, a professor and associate dean at the College of Management and Economics, University of Guelph. “If it stays below 90 cents for a month or two it will impact food prices,” he continued. Currently, the exchange rate sits at $0.91 (U.S.).
While there may not be an immediate price increase, the dropping loonie will be something to consider for shoppers in the future. Stay tuned to DeliMarket TV as we continue to follow the prices in Canadian grocery stores.
