CHARLEBOIS: Food inflation cools, but Canada's grocery pain is far from over

Sylvain Charlebois writes, "For the first time in months, Canadians received a small piece of encouraging news at the grocery store."

By: Sylvain Charlebois

Sylvain Charlebois is director of the Agri-Food Analytics Lab at Dalhousie University, co-host of The Food Professor Podcast and visiting scholar at McGill University.

For the first time in months, Canadians received a small piece of encouraging news at the grocery store. Food inflation eased in April to 3.5%, down from 4.0% the previous month. Grocery prices specifically, food purchased from stores, rose 3.8% year-over-year, still significantly above Canada’s general inflation rate. More importantly, food inflation has now outpaced overall inflation every single month since March 2025. So while the pace of increase may be slowing, food affordability remains one of the country’s biggest economic frustrations, and consumers know it.

Statistics can often understate what people actually experience in supermarkets. Even though the overall grocery inflation rate moderated slightly, many of the products Canadians buy most frequently continue to rise sharply: meat, coffee, bread, vegetables, chocolate and imported produce. These are highly visible staples purchased weekly, sometimes daily, which explains why many households still feel like food inflation is running far hotter than official numbers suggest. Perception matters in food economics because grocery shopping is one of the few inflationary experiences consumers physically confront every week.

Regionally, the picture also remains uneven. Manitoba recorded the highest grocery inflation rate in the country at 4.8%, followed by Saskatchewan and Alberta at 4.4%. Ontario stood at 3.9%, slightly above the national average. Atlantic Canada performed somewhat better overall, with Prince Edward Island posting the lowest grocery inflation rate in the country at just 2.1%. These provincial differences reveal something important about the Canadian food system: inflationary pressures are no longer purely national. Distribution costs, regional competition, transportation realities and local retail dynamics increasingly matter.

Internationally, Canada also lost a title few countries would want. For months, Canada carried the highest food inflation rate among G7 nations. That distinction now belongs to the United Kingdom, which posted a 3.7% food inflation rate in April, narrowly ahead of Canada’s 3.5%. The United States came in at 3.2%, while France and Germany remained far lower at 1.2% and 1.5%, respectively. Ironically, in Britain, Prime Minister Keir Starmer faces growing political pressure over affordability concerns, while in Canada, Prime Minister Mark Carney appears politically stronger than ever despite Canadians still facing some of the highest food inflation rates in the developed world. Politics and inflation do not always move together.

One factor likely helping moderate food inflation in Canada is the elimination of the federal consumer carbon price, often referred to as the consumer carbon tax or fuel charge, which officially ended on April 1, 2025. Food supply chains are extraordinarily energy-intensive. Diesel fuels trucks transporting food across Canada, refrigeration systems run continuously, warehouses consume energy around the clock, and distribution networks depend heavily on transportation fuels. Removing the fuel charge likely eased at least some pressure across the food distribution system. But attributing April’s moderation solely to the end of the consumer carbon price would oversimplify things. Lower commodity prices earlier this year helped stabilize some ingredient costs, the Canadian dollar strengthened modestly against the U.S. dollar, retailers intensified promotions as consumers became increasingly price-sensitive, and energy prices softened temporarily before geopolitical tensions pushed oil prices higher again.

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Yet despite all of this, Canada still maintains one of the highest food inflation rates in the G7 more than a year after eliminating the consumer fuel charge. That should tell policymakers something important: the inflationary pressures embedded within Canada’s food system run much deeper than fuel costs alone. Labour expenses continue climbing across the supply chain, financing costs remain elevated, insurance premiums have increased substantially for transportation and food manufacturing companies, Extended Producer Responsibility recycling fees are quietly adding permanent costs to packaging and distribution, and regulatory burdens continue to expand. In supply-managed sectors like poultry and dairy, structural pricing pressures also remain largely disconnected from broader international competitive forces.

The reality is that Canada’s food inflation story has evolved. We are no longer dealing primarily with temporary pandemic disruptions or isolated global shocks. Increasingly, food inflation reflects structural cost layering within the Canadian economy itself. That is why even modest improvements in monthly inflation numbers should not be mistaken for a return to affordability. For many households, particularly lower-income families, food affordability remains fragile. Grocery inflation at 3.8% may look manageable statistically, but when essentials rise faster than wages, consumers continue falling behind.

And now, another major uncertainty is emerging. The growing conflict involving Iran and instability around the Strait of Hormuz could once again place pressure on global food supply chains. Roughly 20% of the world’s oil shipments and a significant share of global fertilizer trade move through the region, making energy and agricultural markets highly vulnerable to prolonged disruptions. If the conflict drags on, Canadians should expect renewed pressure on transportation, refrigeration, packaging and distribution costs. Cold-chain products such as meat, dairy, frozen foods and fresh produce would likely be among the first categories affected because these sectors depend heavily on energy-intensive logistics and temperature-controlled distribution systems. April’s inflation numbers are encouraging, but global events are reminding us once again just how fragile food affordability can be.