More competition can help keep ‘grocery prices in check,’ report argues
Governments must act to bring more grocers into the Canadian market, argues a new Competition Bureau report examining concentration in the sector.
The investigation, which arose in response to surging inflation at the grocery store last fall, ties higher prices to a lack of competition in the Canadian grocery industry. But it stops short of alleging any wrongdoing or profiteering from grocers amid high price pressures.
Most Canadians buy food in stores owned by a handful of grocery giants, with Canada’s three largest grocers — Loblaws, Sobeys and Metro — collectively reporting more than $100 billion in sales and $3.6 billion in profits last year, the study found.
The Competition Bureau’s investigation sought to find out to what extent high levels of concentration in Canada’s grocery industry was contributing to soaring levels of food inflation — a trend that continues to cause pain on Canadian household budgets.
The latest annual inflation reading from Statistics Canada Tuesday showed that while overall inflation had cooled to 3.4 per cent in May, grocery prices remain elevated at 9.0 per cent last month.
“Canada needs solutions to help bring grocery prices in check,” the Competition Bureau study said. “More competition is a key part of the answer.”
While some critics have accused Canada’s grocers of profiteering off of higher food prices during the current inflationary period, a lack of detailed disclosures about how much of the grocery giants’ profits are derived from food compared to pharmacy and cosmetic sales, for example, has made analysis difficult in the past.
The Competition Bureau report offered new insights into grocers’ food margins, showing “modest yet meaningful” growth since 2017.
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