From Tomatoes to Ice Cream: Food Inflation in the News

I was struck by three stories in the news in the last week that I thought merited a bit of clarity.

Food Price Inflation in Canada

After a month that prices actually came down (although year over year average price increase was 3.8%), food prices went up again in Canada. Food inflation was 1% for the month of May and 4.3% for the year ending May 2026. As always, prices don’t go up uniformly. Some things go up and some go down. Here are some of the key insights from the most recent numbers.

Fresh vegetable prices went up 4.3% in May and are up 7.2% for the year. The biggest increase was tomatoes that went up 8.4% in the month and 45.2% for the year.

Tomatoes at the Supermarket

Fresh vegetable prices went up 4.3% in May and are up 7.2% for the year. The biggest increase was tomatoes that went up 8.4% in the month and 45.2% for the year. Mexico represents 72% of Canada’s tomato imports and 80% of those in the US come from Mexico. Despite a significant volume of greenhouse production, 30% of Mexico’s tomatoes are produced in fields. Severe drought has dramatically reduced the non-greenhouse component of the tomato crop and led to shortages. Given the North American dependence on Mexican tomatoes, this alone would be enough to significantly increase prices. The issue was exacerbated by decreased acres of tomatoes due to a response to the Trump administration’s tariffs on Mexican tomatoes. Reduced acres and dry weather together represent a double hit on supply and, therefore prices.

Supply issues have been a problem continuously throughout this period of higher food price inflation. In truth, the likelihood is high that food prices will be significantly more variable going forward as the frequency and severity of extreme weather events increases.

Another factor affecting vegetable prices across the board is freight costs driven by higher fuel prices. Fresh fruits and vegetables are more transportation intensive (freight represents a higher proportion of the retail price) than more processed products. While shorter travel distances for some products as production moves north in North American with warming weather has more than offset the increased freight costs, many products have gone up in price because they travel long distances, often in refrigerated trucks which are more expensive to run. This has also contributed to higher tomato costs.

Beef prices continued to go up. The past increases have largely been driven by the generationally low cow herd in North America, recent increases are likely driven by demand. We eat more beef in the summer as we barbeque more. We see the prices of rib and loin cuts leading the way which is different that what we have seen in the past 18 months. These prime cuts saw a decrease in demand as higher prices drove people to cheaper cuts of beef without driving them out of the beef category. Now steaks are joining burgers on the barbeque. There is some good news in the protein market as pork and chicken prices came down in May.

We can expect seasonal products to come down in price as Canadian production comes into play. Asparagus and strawberries are already in season and are abundantly available and cheaper. As we get further into the summer, we will see other products decrease in price.

Empire Group Building Discount Stores

Higher food prices are changing how many of us are shopping. We are willing to give up some of the convenience and choice from traditional grocers and are looking for more value through cheaper prices. While traditional stores are not going away, growth will focus on the discount segment. Empire’s new stores will be discount flags like Freshco. This is consistent with what Loblaws announced a few months ago. This reflects a shift by some consumers to the discount segment. Loblaws is even changing some traditional stores to discount flags in selected markets. While not universal, this trend is worth watching as is the performance of other every day low pricing brands like Walmart and Costco.

Ice Cream Price Fixing in Japan

Regulators in Japan announced an investigation of six ice cream treat producers related to perceived price fixing. They have visited the businesses and are reviewing emails and files to see if price increases were coordinated between the companies, which is illegal. Suspicion was raised when price increases seemed to occur simultaneously. This will be worth watching.

This is catching the attention of Canadian media and consumers as prices continue to climb and memories of the bread price fixing scandal are still front of mind for many of us. It raises a couple of interesting questions.

The first is whether this is happening more frequently and driving food prices up. My inclination is that this is not happening more but that we are paying more attention than we have in the past. I expect it happens but that it is not rampant and across the board. It is very difficult to catch so it likely occurs, but the reputational and penalty costs are significant so companies will be cautious.

It is worth noting that this is not happening at the grocery level. The accusations are happening at the processor/manufacturing level. We often talk about grocer concentration affecting consumers, but I would argue that they are much more likely to use their market power to pressure suppliers than to gouge consumers. It is worth remembering that the bread price fixing scandal involved bread suppliers rather than grocers. Loblaws was involved but largely through their ownership of Weston Bakeries. There is no evidence that other grocers were involved and they have all denied it.

I get asked what sorts of products are susceptible to this sort of activity. Products that are easily substitutable are more likely to try this sort of thing. If you have a strong brand, then the threat of kicking you out of the store is less effective. Consumers won’t want to switch. If you have a product that is easily substitutable then you worry about being shut out of a significant segment of the market if a large grocer threatens to kick you off their shelves. In that case, cooperating with your competition might be a way to stay on shelves and maintain margins in the face of strong grocers.

Recommended citation format: von Massow, M, "From Tomatoes to Ice Cream: Food Inflation in the News" Food Focus Guelph (145) , Department of Food, Agricultural and Resource Economics, University of Guelph, June 26, 2026.

Keywords: food, food prices, tomatoes, food inflation, price fixing, ice cream, grocery, supermarket