Inflation in food retail prices has stayed stubbornly high, hovering around 11% for the last four months
was 6.3 per cent higher than a year earlier, compared with a year-over-year gain of 6.8 per cent in November — and 8.1 per cent in June.
A lack of supply naturally boosts prices. Higher import prices are being exacerbated by a weaker dollar: the Canadian currency was trading around 72 cents U.S. in mid-December, down from 80 cents in April. “That also acts to lift prices,” said Leslie Preston, an economist at Toronto-Dominion Bank. “We’ve had a weaker Canadian dollar and we do import a lot of food from the U.S.
Food processors can also opt to lock in prices of the ingredients they need through futures contracts, where the farmer promises to provide a certain number of bushels, say, at a certain time and the buyer garuantees a price. If a tomato sauce manufacturer signed a contract for tomatoes when the market price was high, consumers won’t feel the impact of that until the tomatoes are delivered, the sauce is made, and the manufacturer can negotiate a price increase with the grocery chains.
The whole process stretches out the time between a manufacturer incurring more costs, and those costs showing up in retail prices, if at all. In fact,
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