An annual report on food prices in Canada is predicting more pressure on grocery costs in the coming year — but it also notes that some prices in 2024 were lower than predicted.
The Food Price Report, released Thursday, is forecasting that Canadians will see the biggest price jumps next year in meat and vegetables, along with a jump in the cost to eat at restaurants.
Food prices overall are estimated to increase by three to five per cent compared to 2024 — higher than the Bank of Canada’s inflation target of between one and three per cent.
That means a family of four would pay about $800 more for food in 2025 — roughly $66 extra a month — if food inflation hits the highest point the academics predict.
The annual report is published by a group of universities, including Halifax’s Dalhousie University, the University of Guelph, the University of British Columbia and the University of Saskatchewan.
“We are expecting a difficult year, unfortunately, for families,” said Sylvain Charlebois, lead researcher on the project and a professor at Dalhousie University.
This year, researchers on the project also used several artificial intelligence models to help estimate changes in food prices, though the authors wrote that they had human experts weigh in on the AI results as well.
A slower climb in 2024
Though costs had been predicted to increase by 2.5 to 4.5 per cent, food inflation rose by 2.8 per cent — meaning an increase of $436 for a family of four through the year — bringing total food spending for that family to $16,032. Had the higher end of those predictions come to pass, they would have spent $264 on top of that.
Charlebois told CBC News that 2024 may have seen a bit of a slowdown when it comes to food inflation, but he believes 2025 could see things track back upward.
“A lot of people didn’t feel it, but 2024 was actually a bit of a break year, compared to the last few years … in Germany, the food inflation rate is starting to rise again at the same level as Canada. So we’re not alone in this,” said Charlebois in an interview, speaking from Berlin.
Meat, vegetables, fruit could cost more in 2025
This year, meat, vegetables and restaurant prices are likely to increase faster than other products, Charlebois said.
“Those are the three categories that are likely gonna push food inflation higher next year,” he said.
The Food Price Report is predicting that meat will top its list of food inflation, going up by between four and six per cent. This matches reports from beef industry experts, who have said their product has been hitting record prices.
Growing global demand and scaled-back ranching operations have pushed Canadian beef prices to historic highs, with sirloin cuts up $12 per pound in just one year.
Restaurants and vegetables are predicted to see inflation of between three to five per cent.
Projections for bakery items and dairy are in the middle, with predicted increases of two to four percent.
At the lowest end? Seafood and fruit, with projected increases of one to three per cent in 2025.
Produce vendor noticing improvements
In Calgary, fruit and vegetable wholesaler Freestone Produce has become known for prices cheaper than those at a full-service supermarket; it has cars lined up onto the surrounding roads since the parking lot is full for much of the day.
Ali Soufan, whose family owns the store, says they have been noticing price pressures on their products — and their customers — for several years now.
“So stuff we used to sell for five dollars 10 years ago? It’s now 10 [dollars]… things naturally are going up. Everybody understands it,” said Soufan.
“Since 2021, it’s just been reality.”
The retailer said he’s noticed that price increases have started to slow down and says projected cost increases for vegetables are workable for his business.
“Three to five per cent? We can live with that,” said Soufan in relation to predicted vegetable cost increases.
“That’s actually kind of positive news that it’s not jumping up 10, 15, 20 per cent like it was before,” he added. But he pointed out that customers are very price-sensitive at his store.
“If strawberries are $10 a case, we might have customers come in and buy five boxes,” he pointed out. But when prices climb, he sees people buying much less and believes they stick to their budget for a specific item.
Weak dollar and climate change are factors
One factor in increasing produce costs could be a weaker Canadian dollar, with the report’s authors pointing out that since many food products are imported, a lower loonie means imports become more expensive.
“The dollar’s at around $0.71 versus the greenback, and we’re not seeing that dollar increase anytime soon. If anything, we’re expecting a lower dollar,” said Charlebois, who directly connected the dollar with grocers’ buying power in Canada.
The report also points to “extreme weather” and climate change posing difficulties for food producers, noting there are high cocoa prices in West Africa due to drought and orange juice prices are going up due to flooding in Brazil. Wildfires blocking railway lines in parts of Canada have also posed issues for the supply chain and can drive up costs.