Canadian Food Prices Expected to Increase up to 5% in 2021 Amid Economic Uncertainty

As the coronavirus pandemic continues to decimate the economy, forcing many businesses to adapt to evolving restrictions and social distancing measures, Canada’s food chain is about to face a wave of price increases that may create added strain on already weakened household incomes.

According to Canada’s Food Price Report, which is authored by Dalhousie University, University of Guelph, University of Saskatchewan and University of British Columbia, food prices are expected to increase anywhere between 3% to 5% in 2021, marking the biggest forecasted price increase on record. The report projects that vegetables, meat, and bakery goods will undergo some of the largest price hikes, meaning that a Canadian family of four could be spending an additional $695 on groceries, bringing the average annual food bill to around $13,907.

The coronavirus pandemic created various labour shortages and even shutdowns of major food processing plants, logistics interruptions, and delays at distribution centres, and given that the coronavirus pandemic isn’t going away anytime soon, the significant changes will likely linger into the next year. In order to meet the sudden surge in demand for food, many grocers reverted to e-commerce platforms to better abide by evolving pandemic restrictions, which in turn translated to higher food costs for consumers.

The pandemic crisis has also caused a shift in consumer behaviour, with an increasing number of Canadians buying their food needs from retailers rather than dining out. Prior to the pandemic, consumers were allocating 62% of their food budget on retail groceries, and spending the remainder on restaurants and food services. For much of this year however, it is estimated that Canadians now spend at least 74% of their food income at retailers, with just 26% being spent on restaurant dining.

Indeed, the recent decline in income allocation on food services is likely to persist into 2021, especially as restaurants continue to face obstacles as a result of the pandemic. Although that might suggest that Canadians will have more money in their overall food budget, even amid food price increases, that is not really going to be the case. Canada’s food inflation index has been surpassing the inflation index over the past 20 years, and that trend will continue for the foreseeable future.


Information for this briefing was found via the Canada’s Food Price Report 2021. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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