Food prices to rise modestly in 2012: study

University of Guelph economists predict grocery store competition will slow price increase

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Photo courtesy of rick on Flickr

Photo courtesy of rick on Flickr

Canadians can expect some relief in food prices in the next year, according to a report by two University of Guelph economists.

The study, released Monday, predicts that retail food prices will rise 2 per cent in 2012, a modest increase compared to the 4.3 per cent pace of current food inflation. The price of meat, fresh vegetables and baked goods could rise up to 3 per cent, but the increase is small compared to what Canadians have endured in the past.  In 2011, meat rose 5 per cent, fruit rose 6 per cent and baked good rose 7 per cent. Fresh vegetables topped the list with a 10 per cent increase.

The study notes that the opening of new grocery stores—specifically Wal-Mart Canada’s planned crop of super-centres and Target’s Canadian debut in 2013—will keep competition between stores high and slow food prices from increasing. Canadians spend an average of 10 per cent of their household budget on food.

Sylvain Charlebois, associate dean of research and graduate studies at Guelph’s College of Management and Economics, co-wrote the study with Guelph economics professor Francis Tapon. Charlebois told The Globe and Mail the modest increase will give budget-conscious consumers a break.

“The Canadian consumer will benefit from what will likely happen in the next couple of years in the food distribution sector,” he said. “There will likely be a price war.”