The letters signal further price increases at grocery stores this fall, capping a year that has already seen nearly 10% increases in the cost of food.
In some cases, the higher prices are due to the approval by the Canadian Dairy Commission (CDC) of a second milk price increase this year. Farm gate milk prices will increase by approximately two cents per litre, or 2.5%, on 1er september.
And now dairy processors also appear to be considering their own increases, passing on the hikes, as industry watchers had predicted.
Lactalis Canada, for example, indicated in a letter to customers that it was to implement an average domestic market increase of 5% in September, a rate it said takes into account the price increase of the CLC
significant inflationary costs with which she is confronted.
Arla Foods Canada issued a similar notice, saying price increases for its products coming in September would reflect rising dairy ingredient costs and
inflationary impacts on transport and packaging.
Saputo also stated that it would apply price increases of around 5%, depending on the category.
Producers had to deal with rising production costs as well as rising feed, energy and fertilizer costs, which had a significant impact on the adjustment of the milk price to the farm this yearexplained Saputo in a letter to its retail customers.
In addition to these regulated increases, there have been unprecedented and sustained inflationary pressures affecting manufacturing, energy, labor and distribution costs throughout the supply chain.
The price increases shared with grocers underscore how regulated dairy price increases are amplified by additional price increases throughout the supply chain, said Gary Sands, senior vice president of public policy. of the Canadian Federation of Independent Grocers.
The timing of the increases almost seems to be on top of the regulated increases, he said. The net effect is to further exacerbate the problem and concerns about affordability.
These concerns are particularly acute in rural and remote communities, where transportation and fuel surcharges are higher, Sands added.
The rising price of these essentials is of particular concern in these communitieshe specified.
The price of food purchased from stores rose 9.7% in May from a year ago, with the cost of almost everything in the grocery cart higher, Statistics Canada reported last month.
A cap by 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 starting to slow.
We expect food inflation to peak by the end of September, he said. It could actually be over 10% before things start to calm down.
The U.S. Bureau of Labor Statistics reported on Wednesday that annual inflation for home-grown food in that country hit 10.4% in June, showing the largest 12-month price increase for such products since nineteen eighty one.
Charlebois believes Statistics Canada will release similar food inflation figures next week when it releases its consumer price index data for June.
Soaring prices will prompt grocers to promote their private label options, he said.
Consumers are side-trading or trading on anything and everything right now, and they’re turning to discount stores, he observed. They are really more sensitive to the cost of living.
Additionally, letters sent by suppliers to retailers explaining the reasoning behind the cost increases are part of an effort not to be accused of
The last thing processors want is to become a scapegoat and be blamed for rising food inflationsaid Mr. Charlebois.
Inflation impacts all Canadians, but it also impacts the political economy of food and how the food industry is perceived.
Lactalis indicated in its letter to customers that it was
very aware of the impact of inflation on consumers.
As we all know, this cycle of inflation is largely driven by the latest phase of the evolution of the pandemic and the global geopolitical situation triggered by Russia’s invasion of Ukraine and the ongoing conflict.argued the company.