Prime Minister Justin Trudeau has issued a stern warning to grocery chains, signaling the possibility of imposing new taxes if they fail to rein in the escalating food prices.
In a move to address the mounting concerns over rising costs of living, Trudeau has summoned the heads of the nation’s five largest supermarket chains, which notably include giants like Walmart and Costco, to develop a comprehensive strategy to combat the surge in prices before the upcoming Thanksgiving holiday.
During a caucus retreat in London, Ontario, Trudeau left no room for ambiguity, stating, “If their plan doesn’t provide real relief for the middle class and people working hard to join it, then we will take further action, and we are not ruling anything out including tax measures.”
The Prime Minister underscored the incongruity of supermarket chains reaping record profits while a substantial portion of the Canadian population grapples with the challenge of putting food on their tables.
“Large grocery chains are making record profits,” Trudeau emphasized. “Those profits should not be made on the backs of people who are struggling to feed their families.”
It is noteworthy that back in December 2022, Trudeau said in an interview that his government is dismissing the “simplistic” idea of slapping a windfall tax on the grocery and energy sectors, saying this would bring out more problems than solve them.
“The last thing we want to do is put on a tax that people then just pass along to the consumers,” Trudeau said in a year-end CBC interview. “I don’t think that the simplistic solution, as satisfying as it might sound, is necessarily the right approach here.”
The remarks coincided with the release of Sobeys parent firm’s, Empire Company, financials for fiscal Q1 2024. For the three-month period, the company posted net earnings of $261.0 million, equivalent to $1.03 per share, as opposed to $187.5 million, or $0.71 per share, in the previous year. Adjusted net earnings came in at $196.2 million, translating to $0.78 per share, compared to $187.5 million, or $0.71 per share, for the corresponding period last year.
“Fiscal 2024 is off to a good start, supported by stronger top-line performance in our Full-Service banners, continued double-digit sales growth in our Discount banner and solid control over our retail margins,” said CEO Michael Medline. “Despite the ongoing volatility that the market continues to face, the results we delivered in Q1 demonstrate our team’s ability to consistently execute, regardless of the economic environment.”
The disconcerting statistics paint a stark picture, with grocery prices surging by a significant 8.5% in July compared to the previous year, in contrast to the general inflation rate of 3.3%.
The retail sector in Canada has attributed these price hikes to rising costs incurred by producers and suppliers, largely influenced by international factors such as the ongoing conflict in Ukraine.
However, the Retail Council of Canada, in a statement issued on Thursday, urged the federal government to look inward for solutions.
“Rather than casting blame where the experts agree it does not belong, the federal government should look in the mirror,” the Retail Council of Canada said in a statement.
They suggested a range of potential measures to make food more affordable, including the temporary removal of the carbon tax from farmers, food processors, and distributors, as well as the cancellation of the government’s proposed plastic packaging targets, which could potentially increase costs to grocers by a staggering $6 billion annually.
Information for this story was found via Al Jazeera, CBC, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.