The letters signal further price hikes at grocery stores this fall, capping a year that has already seen grocery costs rise nearly 10%.
In some cases, the higher prices reflect the Canadian Dairy Commission’s (CDC) approval of a second milk price hike this year. Farm-gate milk prices increase on 1 Januaryah September.
And now dairy processors too appear to be considering their own increases and passing on the increases, as industry watchers had predicted.
Lactalis Canada, for example, said in a letter to customers that it would implement an average domestic market increase of 5% in September, a rate that takes into account the appreciation of the US dollar CLC
significant inflationary costs with which she is confronted.
Arla Foods Canada issued a similar statement, saying price increases for its products coming in September would reflect the rising cost of dairy ingredients
inflationary effects on transport and packaging.
Saputo also stated that it would increase prices by around 5% depending on the category.
Producers had to deal with rising production costs as well as increasing feed, energy and fertilizer costs, which had a significant impact on the adjustment of the milk price to the farm this yearSaputo explained in a letter to its retail customers.
In addition to these regulated increases, there have been unprecedented and persistent inflationary pressures affecting manufacturing, energy, labor and distribution costs throughout the supply chain.
The price increases communicated to grocers underscore how regulated dairy price increases are being amplified by additional price increases throughout the supply chain, said Gary Sands, senior vice president of public policy for the Canadian Federation of Independent Grocers.
The timing of the increases appears to be almost ahead of the regulated increases, he claimed. The net effect is to further exacerbate the problem and affordability concerns.
These concerns are particularly acute in rural and remote communities, where transportation and fuel surcharges are higher, Sands added.
The rising price of these necessities of life is of particular concern in these communitieshe specified.
The price of groceries bought in stores rose 9.7% year-on-year in May, with the cost of almost everything in the shopping cart higher, Statistics Canada reported last month.
An upper limit until the end of September?
Sylvain Charlebois, director of Dalhousie University’s Agri-Food Analytical Sciences Laboratory, estimated that the pace of food price increases could reach 10% before slowing down.
% avant que les choses ne commencent à se calmer”,”text”:”Nous nous attendons à ce que l’inflation alimentaire plafonne d’ici la fin septembre, a-t-il précisé. Cela pourrait en fait être supérieur à 10% avant que les choses ne commencent à se calmer”}}”>We expect food inflation to peak by the end of September, he said. It could actually be over 10% before things settle down.
The US Bureau of Labor Statistics reported Wednesday that annual inflation for homegrown food in this country hit 10.4% in June, marking the largest 12-month price hike for such produce since 1981.
Charlebois believes Statistics Canada will release similar numbers on food inflation next week when it releases its June CPI data.
Rising prices will prompt grocers to promote their private label options, he said.
Consumers are currently doing side businesses or trading in anything and everything, and they are turning to discounters, he observed. They are really more sensitive to the cost of living.
Additionally, letters from suppliers to retailers explaining the reasons for the cost increases are part of an irreproachable effort
The last thing processors want is to be the scapegoat and blamed for rising food inflationsaid Mr. Charlebois.
Inflation affects all Canadians, but it also affects the political economy of food and how the food industry is perceived.
Lactalis stated in its customer letter that this is the case
are very aware of the impact of inflation on consumers.
As we all know, this inflationary cycle is largely driven by the recent phase of the pandemic development and the global geopolitical situation triggered by Russia’s invasion of Ukraine and the ongoing conflict.the company argued.