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Food inflation ticks higher in May for first time in nearly a year

Rising food prices are affecting the way Canadians dine out, as people seek value.
Trolley full of groceries near piles of money with increasing food prices graph background

Higher grocery prices continue to wallop Canadian household budgets, with food inflation ticking higher in May for the first time in nearly a year.

Statistics Canada reported Tuesday that grocery prices rose 1.5% in May, slightly higher than in April when they rose 1.4%. It marks the first acceleration in grocery prices since June 2023.

While the May increase was modest, it comes on top of already elevated grocery costs in Canada. 

Overall, food prices are up 22.5% since May of 2020, Statistics Canada data shows.

The result is that food costs remain a significant drag on the consumer wallet, said RBC Capital Markets analyst Irene Nattel.

She added that the latest food inflation figures make it unlikely that consumers will give up their bargain-hunting behaviour, such as seeking out discount brands, promotions and sales.

"That 22.5% food price increase since May 2020 is a significant headwind to household budgets and likely to sustain value-seeking behaviours," Nattel wrote.

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On a month-over-month basis, Statistics Canada says growth in May food prices was driven by higher prices for fresh vegetables (up 3.5%), meat (up 1.3%), fresh fruit (up 2.2%) and non-alcoholic beverages (up 2.4%). 

The monthly increase in meat was largely the result of higher prices for fresh or frozen beef, amid high demand and tight supply, Statistics Canada noted.

A new survey by Lightspeed Commerce Inc. found rising food prices is also affecting the way Canadians dine out—from tipping less to seeking out happy hour specials.

The survey of 1,500 respondents in Canada found seven in 10 diners report noticing rising prices at restaurants over the last year. 

Four in 10 noted their favourite dishes are shrinking in size, a phenomenon commonly referred to as "shrinkflation."

However, the Lightspeed survey found 44% of respondents still expect to continue dining out in spite of cost pressures. 

The survey also points to an uptick in money-saving behaviours. Thirty-nine% of restaurant-goers said they are hunting for deals with coupons, 33% are choosing value meals, and 26% are making the most of happy hour specials.

In addition, 25% Canadian respondents also said they are tipping less in an effort to control the cost of eating out.


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