A new report from economists with Royal Bank of Canada predicts food inflation will slow in Canada, but prices will stay high amid lasting challenges such as increasingly frequent severe weather events.
“While we continue to expect lower food inflation in the current economic cycle, we don’t expect food prices to return to pre-pandemic levels,” the authors of the June 14 report concluded.Food costs have risen by 18 per cent over the past two years. Grocery store prices peaked in January, and were still 8.3 per cent higher than the year earlier as of April.
The latest Business Outlook Survey from the Bank of Canada “flagged even more positive signs when it comes to businesses’ price-setting,” the report added, as “more are expecting slower growth and less frequent adjustments to their output prices in the year ahead.” “Deteriorating purchasing power should continue to dampen demand before ultimately putting a drag on inflation more broadly, but also on the pace of food price increases.”Despite the outlook for slower food inflation, the economists cautioned that lingering factors “suggest prices won’t drop outright.”
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