Food prices likely to rise in 2012: University of Guelph

A new study says Canadians may find some reprieve at the supermarket cash register next year as the rise in food prices slows down.

In a report released Monday, two University of Guelph professors say prices for food will inch ahead by less than the current inflation rate.

The 2012 Food Price Index forecast estimates that general food prices will rise about two per cent at most.

The cost of meat products will jump about three per cent, compared to a rise of about five per cent in 2011, while the price of fresh vegetables will go up one to three per cent in 2012, versus a jump of 10 per cent this year.

Also, baked goods prices are expected to rise three per cent, from seven per cent this year.

Food prices have been on the upswing in recent years as raw materials prices surge affected by soaring costs for fuel used to transport goods.

Some of those higher expenses have been incorporated into the price consumers pay at the register, but supermarket operators like Loblaw (TSX:L), Metro (TSX:MRU.A) and Sobeys (TSX:EMP.A) have also lessened the impact with price wars against each other and retail giant Wal-Mart Stores Inc. (NYSE:WMT).

“We saw significant increases in retail prices, primarily because input prices went up significantly,” said economics professor Francis Tapon.

“For 2012, it’s expected that input prices won’t have as much of an impact as they did in 2011.”

The study also credited the arrival of U.S. retailer Target in Canada next year as another factor that will help keep food prices lower and competition alive.

Canadians are also expected to maintain their cost-efficient practices as they selectively purchase foods, eat out less and tighten spending on premium food products such as organically grown and fair trade.

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