You’re right to cry when you go to the grocery store. In fact, food prices have increased significantly over the past two years.
• Also read: Quebec was hit hard by inflation for three years
• Also read: The tree that hides the forest: Inflation is falling, prices remain high
Based on consumer price index data compiled by Statistics Canada for the period June 2021 to June 2023, I calculated that the basket of store-bought groceries in Quebec increased by 21.1%.
For comparison, this is roughly double the wage increase granted to workers in Quebec over the same two-year period, ranging from 10% to 10.5%.
Who has benefited the most from this dramatic increase in grocery shopping costs? Farmers, producers, traders, transport companies or food supermarkets? It won’t surprise you to learn that all these wonderful people are blaming each other for the rising prices.
Significant profit growth
What is certain is that the major food distributors Metro and Loblaw have benefited greatly from the rise in food prices, noting growth in their sales volumes and, most importantly, a significant increase in their net results (profits). And this to the great advantage of their respective shareholders, who saw the stock market of their respective companies soar.
Led by CEO Eric R. La Flèche, Metro operates 950 grocery stores under a variety of brands, including Metro, Metro Plus, Super C, Marché Adonis and Ontario supermarkets Food Basics. Next to the drugstore chains Jean Coutu and Brunet.
According to analysts at Desjardins Securities, Metro’s net earnings per share growth is likely to reach 23.8% over two years.
In turn, Loblaw controls around 2,400 supermarkets in all Canadian provinces, namely Maxi, Provigo, Loblaws, Freshmart, No Frills, T&T supermarkets, as well as the Shoppers Drug Mart and Pharmaprix chains.
On the side of Ontario giant Loblaw, whose CEO is Galen G. Weston, who is also president and CEO of parent company George Weston Limitée, analysts at Desjardins are forecasting a 37% increase in net income.
Specifically, Metro’s strong financial results caused the stock to surge 26%, adding $3.58 billion to the company’s market value over the past 24 months.
Loblaw, the No. 1 supermarket in Canada, exploded as its stock surged 59%. Loblaw’s market capitalization increased by $14.4 billion.
A word now on Empire, the other food giant in Canada, headquartered in Nova Scotia. The company has 1,600 grocery stores nationwide. Its main brands are IGA, Sobeys and Safeway.
Surprisingly, this other major food player in Canada doesn’t appear to have “benefited” from rising food prices, at least for now. Net earnings growth would be capped at 7.3% over the two years. And that’s probably why Empire’s shares are languishing in the stock market.
SHOPPING VENTURE
Which foodstuffs have risen the most in price in the last two years of inflation?
- Beef: 24.7%
- Butter: 28.9%
- Grain products: 27.1%
- Fresh fruit: 25.8%
- Baked goods: 23.5%
- Canned vegetables: 28.1%
- Edible fats and oils: 51%
- Fresh vegetables: 20%
On the other hand, there are still two essential foods whose prices have risen more significantly. I am referring here to fresh milk (+10.2%) and eggs (+10.1%).
Between the two “extremes” we find a variety of foodstuffs whose prices have risen significantly more than wages. Here you are:
- Fresh or frozen pork: 17.6%
- Fresh or frozen chicken: 16.0%
- Fish and seafood: 16.2%
- Cheese: 19.4%
- Coffee and tea: 19.7%
- Soft drinks: 15.3%
Also note that sales of personal care items and accessories at grocery chains and their pharmaceutical affiliates have increased by 13.6% in two years.
As a consolation, over-the-counter and pharmaceuticals were up just 4.3%.
A little pill to go with it? Note that the price of prescription drugs has only increased by 1.7%!
