Ongoing effects of the pandemic on the food supply chain and higher commodity prices mean that Canadian families will pay $966 more for food in 2022 than they did in 2021.
That’s according to the annual Canada’s Food Price Report prepared by the University of Guelph’s Arrell Food Institute (AFI), Dalhousie University, the University of British Columbia and the University of Saskatchewan.
The report shows a family of four will have an annual food expenditure of up to $14,767 — an increase of up to $966 from the annual cost in 2020.
This 12th edition of the food price report also predicts prices will continue to increase over 2022.
The expected increase in grocery bills is based on the prediction that food prices will increase by 5 to 7 per cent overall, which is the largest predicted increase in the 12 years of the report. Last year, the report forecasted prices to increase by 3 to 5 per cent for 2021 – a prediction that proved accurate.
Dairy, Vegetables, Bakery Items Up
Among the categories expected to see the biggest increases in 2022 are dairy items, which will rise 6 to 8 per cent, and vegetable and bakery items, both of which are expected to rise by 5 to 7 per cent.
Meat and seafood prices will not rise as much in 2022, increasing by up to 2 per cent, if at all.
Menu prices at restaurants are predicted to rise by 6 to 8 per cent as these businesses contend with high food prices, labour market challenges and ongoing problems with supply issues.
Dr. Simon Somogyi, a professor in U of G’s Gordon S. Lang School of Business and Economics and price report project co-lead, said the food supply chain faced strain in 2021 that will continue into 2022.
“Those challenges include high transportation costs, reduced maritime cargo capacity and labour shortages,” he said. “The drought conditions and wildfires throughout 2021 didn’t help either and worsened supply problems, which contributed to further increases.”
Food Inflation Outpaces General Inflation
Compared to the $12,508 the average family of four paid for food in 2020, prices will be up nearly $2,000 in 2022 — an indication of how vastly the food cost landscape has changed in two years.
“The food inflation index has well outpaced general inflation between 2000 and 2020 in Canada,” said Somogyi. “If you look at that time frame, a typical grocery bill rose by a stunning 70 per cent over the last 10 years, which means Canadians are having to allocate a much higher proportion of their income to food.”
The report notes COVID-19-related supply chain disruptions and labour market challenges are some of the biggest factors driving inflationary pressure. Although there are indications salaries will increase in 2022, food inflation is likely to continue to outpace that increase.
The price report authors assume that Canadians are cooking and eating exclusively at home, and do not include restaurant and other food service costs.
Households that continue to use online grocery platforms and/or food delivery services, for example, can expect to pay an additional 2 to 8 per cent, depending on what services they choose.
“Overall, our predictions are somewhat conservative and may run higher than 5 to 7 per cent due to the inflationary economy we are living in,” said Somogyi.
To arrive at their predictions, the research team uses historical data sources, machine learning algorithms and predictive analytics tools developed over many years to predict food prices in Canada.
The University of Guelph’s Centre for Advancing Responsible and Ethical Artificial Intelligence helped by using machine learning predictive analysis for the different categories of food and predicting the 2022 Consumer Price Index changes.
Other U of G members involved in the report were Dr. Jess Haines, Department of Family Relations and Applied Nutrition; Dr. Maria Corradini, Department of Food Science; Dr. Graham Taylor, School of Engineering and Vector Institute; Dr. Ethan Jackson, Vector Institute; Sara El-Shawa, School of Engineering and Vector Institute; Dr. Erna van Duren, School of Hospitality, Food and Tourism Management; and Paul Uys, Ontario Agricultural College.
Contact:
Dr. Simon Somogyi
ssomogyi@uoguelph.ca