this post was submitted on 07 Aug 2023
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Canada’s inflation rate is plummeting, so why are grocery prices still so expensive? (www.ctvnews.ca)
submitted 1 year ago by [email protected] to c/[email protected]
63 comments fedilink hide all child comments
 

TLDR; climate change, Russia, supply chain not recovered, labor shortages; more price increases expected :/

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[–] kittens 1 points 1 year ago (4 children)

I would imagine part of it is related to the same reasons why my business’s prices are still high: rapidly rising insurance and increased costs of materials due to supply lines that were negatively impacted due to the slow down that was caused by COVID.

I’ve had literally dozens of customers in the last two years look at my quotes, balk and then go shopping for a better deal only to come back to me when they realize this is the new normal. Then they have to deal with the fact that contractors like me are booking new projects for 2025-26.

[–] [email protected] 3 points 1 year ago (1 children)

I think your comparison of your industry to the grocery industry likely isn't particularly akin, the grocery industry is much more...peculiar, or at least idiosyncratic than most, which is illustrated by the price of groceries not being in line with inflation.

[–] [email protected] -2 points 1 year ago* (last edited 1 year ago)

the grocery industry is much more…peculiar, or at least idiosyncratic than most

In what way?

  • Inflation is only concerned with the value of the currency. Like everything on the other side of the transaction, food has its own independent value. One that has risen, largely due the Ukraine conflict reminding people how vulnerable the food supply chain is, and them now seeing food as being more valuable than in the recent past. They are willing to pay more – much more, in a lot of cases – because of that.
  • Let's not forget the farm gate price peaked in 2022 at around ~100% over 2018 prices – for a number of reasons, but the EU fertilizer plant shutdown quickly followed by loss of access to Russian fertilizer being a primary driver. That is what you're currently feeling at the grocery store. The farm gate price is now down ~50% off the peak. You will start to see that roll into the grocery store within the next year. Remember, wholesale food is largely purchased on futures contracts. You, at the store, are mostly buying what the farmer sold in 2021-2022 right now.

Frankly, the grocery industry is one of the least idiosyncratic markets around.

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