Debunking Food Inflation Misunderstandings
Statistics Canada reports inflation numbers, including food inflation, monthly. Given the currently high levels of food prices and general inflation, these numbers get press attention every month. It is amazing how often the numbers are misrepresented or misunderstood. I don’t think this is malicious, but it clearly leads to hyperbole and confusion. This post provides a perspective on the food price inflation numbers provided by Statistics Canada for the month of April, 2023.
Food Price Inflation is Less Than You Might Believe
The annual number of food purchased from stores reported for the month of April was 9.1%. This doesn’t mean that food prices went up by that amount in April. It means that food prices in April 2023 were 9.1% higher than they were in April of 2022. That matters. If prices went up in the fall of 2022, they would be reflected in the inflation numbers for both March and April (and several previous months). I am a tall guy. I went through growth spurts in my teens. If I grew 4 inches in the period September to October and not at all for the rest of the year, I would have been 4 inches taller on Jan 1 than I had been the previous year. I would also be 4 inches taller on February 1 than I had been on Feb 1 of the previous year but not 4 inches taller than I was on January 1. Food is still significantly more expensive than it was a year ago – I don’t want to diminish that. But we shouldn’t get uptight about something that we’ve already been uptight about.
It is worth looking at the prices changes over the month of April. That was 0.2%. If you extrapolate that out over a full year it equates to 2.4% for a year. This suggests that food inflation might be slowing and that there is room for some optimism. We expect food prices to go down at this time of year and we also expected some relief from the exceptional circumstances of the previous year. While prices are not lower than they were last month, the rate of increase is considerably lower and has been for a couple of months – the rate April 22 to March 23 was 9.7% but the rate for just March 23 was 0.3%. Things are slowing down.
Not all Food Prices Are Going Up
We talk about inflation rates in single numbers. This is an average across all categories and masks the reality of what is happening in our shopping baskets. Some prices did go up in April. In fact, some prices went up more than the 0.2% average. The meat category went up 3% in April, driven by beef and frozen chicken. Ham and bacon actually went down almost 5%. Before t is worth noting that the meat category is actually up less than the food category generally in the past year – 6.7% versus 9.1%.
On the other hand, fresh vegetables were down by 4.1% in the month of April led by tomatoes which were down over 7%. These decreases are driven by movement in the locality of production. As we get into the spring, products aren’t shipped as far so prices can come down. Another factor is that extreme weather in January drove prices up and as production moved it was affected by new weather events so supply was more normal.
Food prices merit attention and food inflation has inflicted considerable pain on Canadian consumers over the past year. It is worth understanding what is happening and why rather than responding to misinterpreted hyperbole.
Keywords: grocery food retail price tax inflation food prices
Recommended citation format: von Massow, M. "Debunking Food Inflation Misunderstandings". Food Focus Guelph (133), Department of Food, Agricultural and Resource Economics, University of Guelph, May 19, 2023.