Pressure growing on federal government to make groceries more affordable

As grocers continue to make big profits while Canadians make tough choices about month-to-month expenses, pressure is growing for the federal government to do something to make food more affordable.

“One of the main sources of affordability challenges in our country is your grocery bill, which has been easing a bit, but continues to outpace inflation,” CityNews’ Parliament Hill reporter Cormac MacSweeney explained.

“There’s no doubt Canadians will be looking for something to help ease that financial pain in the upcoming federal budget, but what’s not really clear at this point is what the government is going to do about it. There are several different options.”

One of the measures being kicked around in Ottawa is a possible windfall tax on the big grocers. A non-binding motion was tabled last week by the NDP, with support from the Liberals and Bloc Quebecois, for an excess profit tax on the big retailers.

“Basically, if there is a suspicion that grocery giants are gouging customers or profiting as people struggle, there should be an added tax on those corporations, and then that money is used to help struggling Canadians,” said MacSweeney, adding that the threat of the tax would be meant to deter the chains from overly inflating prices.

“However, the criticism of that approach is that it may not actually save people money because there’s a likelihood the cost to those companies would just be passed on to the consumers in the price they pay on the shelves.”

Another possible solution is a grocery code of conduct.

“The Innovation Minister ordered the top five chains to negotiate their own code with the aim of evening the playing field a bit, and making sure there is fair dealing from the farm to supply centres to grocery shelves.

“But companies like Walmart and Loblaws have not been supportive of a code and the feds have threatened to potentially force one on those companies, so we’ll see if that’s the route they go.”

Another option, McSweeny explains, is increasing competition in the Canadian market by bringing in foreign grocery chains, but he suggests that is easier said than done.

“The Innovation Minister has been flirting with foreign companies for months and there are still no takers. There have already been some changes to the Competition Act and more powers given to the Competition Bureau to try to make the market more attractive to companies from the US and Europe,” he said.

“We’ll see if the budget contains any additional competition measures, although the minister has ruled out any incentives like lucrative government grants to try to get these companies into the country.”

MacSweeney adds that no matter which options the federal government considers for the April 16 budget, after months of promises to tackle the problem of high grocery prices in Canada, people will expect to see some sort of action.

Statistics Canada’s latest data shows the rate of food inflation continued to ease through February, but grocery prices continue to increase and remain elevated.

From February 2021 to February 2024, prices for food purchased from Canadian stores increased 21.6 per cent.