What is food inflation and is it the same as rising food prices?
Food inflation: The progressive increase in the value of all food goods.
Food price rise: The increase in the price of a product at the retail level.
Grocery shopping is a jaw-clenching, budget-busting experience these days. Even when you shop the sales and scan the flyers, food shopping is expensive.
According to Statistics Canada, the average Canadian household spent $10,265 on food in 2019.(1) Even with shortages during the pandemic lockdowns, Canadian families still spent less on groceries. Based on Statistics Canada, the average Canadian household now spends $14,767 on groceries in 2022 — a whopping 36% increase in just three years. (2)
There are many factors that impact food prices in Canada — from rising interest rates to supply-chain bottlenecks to consumer preferences and the push for corporate profits.
“The astonishing price discrepancies observed among different stores highlight the need for improved monitoring and vigilance,” explains University of New Brunswick, Department of Economics Associate Professor, Murshed Chowdhury. “In many instances, the price increases may stem from inadequate monitoring and a lack of corporate social responsibility. To determine whether these policies are driven by demand or supply factors, the Bank of Canada could employ surveys as a means of obtaining clear insights.”
At Finder, our aim is to help you make better money decisions, so we dug into the factors that impact food prices in Canada. To help illustrate the growing grocery prices, here are 13 food inflation statistics:
5% — Average food inflation between 2020 and 2021, across Canada (3)
$14,767 — Average annual food costs, per household, in 2022(4)
70% — The typical grocery bill increase between 2000 and 2020(5)
23% — Average year-over-year price increase for cannabis products(6)
13.2% — Average year-over-year price increase for fresh fruit(7)
6.5% — Average year-over-year price increase for meat(8)
26.9% — The portion of a food budget spent on eating out(9)
$560 — Typical per kilogram weight-loss cost, based on the cheapest popular diet (10)
$1,962.51 — Per person average annual cost of eating dinner out(11)
1 in 4 — Canadian shoppers will continue online grocery shopping(12)
$29.8 — How much the Canadian fast food industry is worth in 2022 in billions of dollars(13)
1.5% — GDP contribution from restaurants, bars and caterers in Canada, as of 2019(14)
$1,300 — Cost of the food waste the typical Canadian household throws away, each year(15)
Food inflation: The progressive increase in the value of all food goods.
Food price rise: The increase in the price of a product at the retail level.
By the end of 2021 and going into 2022, the general inflation rate was the highest it has been since the most recent peak in the early 2000s, right after the dot-com bubble burst.
According to data collected by Dr. Sylvain Charlebois, the lead author and project lead for the Dalhousie University’s Food Price Report, food inflation outpaced general inflation over the last 20 years — with a typical grocery bill increasing by 70% between 2000 and 2020.(16)
So, what is causing food inflation in Canada? Increased food prices are due, in part, to:
Unfortunately, the factors causing food inflation in Canada didn’t pop up when the pandemic hit in early 2019. Research from Dalhousie University analysts found that food inflation in Canada began well before the pandemic stressed supply chains and prompted staple shortages. According to data from Dalhousie University, Canada’s median income grew 6.6% between 2015 and 2019 but national average food expenditure increased by 16.3% during the same time-frame.(17) Even before the pandemic hit and before the rapid increase in pricing in 2022, Canadians were already allocating a larger portion of their income to higher grocery prices.(18)
The impact of rising food prices did not impact every Canadian equally. Based on data collected by Dalhousie University, the rising costs of food inflation had a much larger impact on families with children under the age of 18.(19)
For instance, a household with no dependants and two adults between the ages of 35 and 45, could expect to pay approximately $6,942 per year on food, in 2021. Compare this with the approximate $13,811 in annual food costs for a family of four with both kids in their teenage years.
When faced with an increase in the cost of living, many Canadians looked to slash their food and entertainment costs in order to save. Between April and June 2023, 14% of Canadians planned to cut back on food-related costs, according to survey data from the Finder: Consumer Sentiment Tracker Q2 2023. This increased to 17% of respondents who planned to cut back on food-related costs between July and September 2023, according to survey data from the Finder: Consumer Sentiment Tracker Q3 2023.
According to Statistics Canada, the pace of food inflation moved faster in the last year than in the last 40 years — and faster than the year-over-year price increase of soft drinks and alcoholic beverages, but not as fast as the astronomical price increase of cannabis products.(20)
Soft drinks and alcoholic beverages5.1%
|Soft drinks and alcoholic beverages
To get a better understanding as to what products impact the overall cost of food, Statistics Canada collects and records the ongoing cost of specific food items across Canada. Collected on a monthly basis, this data provides an opportunity to determine exactly what food prices are most impacted by inflationary pressures.
According to the August 2022 data, the average year-over-year price increase for the largest food categories was:(21)
|Condiments, spices and vinegars
|Sugar and confectionary
|Fish, seafood and other marine products
[Rising] food prices are reflecting supply chain issues fuelled by the war and climate change. There is [also] the issue of market power that large grocery stores are using — [and this influence] is reflected in their profit [margins].
While external factors, such as global supply chains and fuel prices, can impact the demand and cost of various food items, there is another more fickle factor that can have a significant impact on near-term food price fluctuations: consumer habits.
The impact of market sentiment could be viewed during the first few months of the pandemic restrictions when fear prompted consumers across North America to stock up and, in some cases, hoard various consumer staples such as toilet paper and bleach. The result was a quick spike in product costs for these sought-after items, followed by nationwide store regulations to limit the quantity and return of particular items.
Turns out consumer sentiment has always played a large role in the demand and subsequent cost of food and meal management.
For instance, research suggests that almost 1 in 4 Canadians (22.2%) intend to continue their online grocery shopping and delivery services even after pandemic restrictions were lifted.
The impact of the pandemic also shifted where we want to get our food with 3 out of 4 Canadians (75.2%) now supporting more availability and visibility of local food products and almost half (47.4%) with a strong intention of buying and supporting local food producers.(22)
Pandemic constraints and global supply issues are not the only factors to shift consumer sentiment. Another major influence is overall food literacy and the popularity of specific diets.
As a concept, food literacy is the combination of skills and knowledge about food and how it relates to health and well-being as well as the environment and community. High food literacy means a person has a positive attitude and relationship with food and can consistently make and prepare healthy food choices.
According to academic researchers, overall food literacy appeared to improve in Canada during the pandemic — but this doesn’t mean that many Canadians still don’t struggle with being able to find and afford healthy food choices.
In 2022, food insecurity will be a big issue as Canadians’ grapple with rising prices. Food programs may face increased demand along with higher costs for food, and food retailers may see increased rates of theft. We will continue to feel the growing impact of climate change and the continued effect of both transportation and labour market challenges.
Quite often, Canadians will rely on specific diets as a way to make healthier food choices, but the success and cost of each diet can vary, sometimes quite dramatically.
To assess the cost and efficacy of specific diets, Finder analyzed seven of the most popular diets among Canadians. Based on 35 standard recipes that reflected each diet’s criteria, we collected food prices for all ingredients and calculated the overall cost of this diet for an entire year. (And, yes, we took into consideration that select ingredients could last and be used from one recipe to the next.) This analysis found that the most expensive diet was Atkins and the least expensive was keto, with the diets ranging in overall annual per person costs from $2,600 to more than $4,800.(23)
But what about those looking to follow a specific diet in order to shed a few pounds? Did the most expensive diet also translate into the most effective when it came to losing weight?
To determine the success of these seven diets, Finder analyzed numerous academic studies from a variety of institutions, including the University of Toronto, McMaster University and the University of Alberta.
According to the analysis, the popular South Beach Diet was the most successful in helping people lose weight, with an average weight loss of 7.2 kilograms per year. The least successful was the paleo diet, with an average weight loss of 2.3 kilograms per year. (There were no available studies on average weight loss for Whole30, so this diet was not included in our comparison.)
According to the research, the diet that offers the best value is the South Beach Diet. Based on the average weight loss of 7.2kg per person and the average annual food costs of this diet, the typical person can expect to pay approximately $560 for every kilogram of weight loss.
Food plays an important role in holidays and celebratory occasions in Canada. While recipes and traditions will vary based on a variety of reasons, many Canadians will use specific food items during specific holiday celebrations.
In Canada, turkey plays an important role in a number of annual celebrations, including Thanksgiving, Christmas and Easter. In fact, Thanksgiving, which is celebrated on the second Monday in October, is a statutory holiday in all provinces and territories except in the Atlantic provinces of PEI, Newfoundland and Labrador, New Brunswick and Nova Scotia.
Good thing, then, that the number of turkey farmers held relatively steady over the last 20 years. As of 2021, there are more than 500 turkey growers in Canada, with the majority of these farmers located in Ontario and Quebec. Over the last 20 years, the value of turkey production has grown from annual revenues of $163,168 in 1981 to $397,105 in 2021.(24)
To bring a bit more perspective, here are nine turkey, Thanksgiving and holiday facts and stats:
143 — Number of years Canadians have celebrated Thanksgiving (from 1879 to 2022)(25)
513 — Number of turkey farmers in Canada, as of 2021(26)
7 — Number of commercial turkey hatcheries in Canada, as of 2021(27)
24.9 — How many millions of kilograms that Canadian turkey farmers export(28)
7 million — Number of whole turkeys consumed by Canadian households (29)
36% — Percentage of whole turkeys purchased by Canadians for Thanksgiving(30)
2.9 million — Number of whole turkeys purchased by Canadians for Christmas (31)
6.2 kg — Maximum weight for a ‘broiler’ turkey(32)
1957 — The year parliament the second Monday in October officially Thanksgiving(33)
Like all food costs, the price for a turkey has increased over the years.(34)
Food inflation and rising food prices didn’t just impact Canadians at the grocery store. Restaurants and meal preparation businesses were also hit with higher food costs and as a result, the cost of eating away from home also increased.
According to Statistics Canada, the average Canadian household spent more than a quarter (26.9%) of their food budget on meals and snacks purchased outside of the home in 2019.(35)
Assuming a similar amount is spent today, that would mean almost $4,000 of a typical Canadian’s food budget goes towards take-out and eating out.
Looking to increase your fruit or vegetable intake? Consider shopping for frozen fruit delivered through these grocery stores. For fresh vegetables, a number of grocery and specialty stores will deliver or opt for frozen vegetables delivered right to your door.
Pandemic restrictions certainly altered how and where we spend our money. While eating out was certainly impacted, since restrictions limited public gatherings for a significant period of time, it did not seem to dampen how much we spend on take-out and on prepared food purchased outside of the home.
Between 2016 and 2021, the fast food industry grew by 1.3% and by the end of 2021, the industry was worth $27 billion — and this was after a year of pandemic restrictions. As restrictions began to lift, fast food restaurants in Canada began to experience a surge in sales with a reported 8.2% market growth in 2022. Now, the market size for the fast food industry in Canada is worth $29.8 billion.(36)
However, the entire food industry in Canada was not spared the negative impact of pandemic restrictions. In 2019, the total amount of annual sales generated by restaurants, bars and caterers in Canada, was $79 billion — 1.5% of Canada’s GDP.(37) While food industry sales are predicted to rebound in 2022, analysts are not confident that sales will return to pre-2019 levels. In fact, reports from Restaurants Canada, the largest membership organization and the only national association for the food service industry, predict that real sales in 2022 will be 11% lower than 2019 annual sales, once adjusted for inflation.(38)
To survive pandemic restrictions, 80% of Canadian restaurants took on debt. Now, in 2022, these same restaurants are battling food inflation. According to Restaurants Canada, consumers paid an average of 6.6% more for food at restaurants in 2022 compared to 2021 prices. This is based on the average increase in full-service restaurant menu prices of 6.5% from 2021 t0 2022 along with an average increase in quick-service restaurant menu prices of 6.7% between 2021 and 2022. (39)
When it comes to eliminating costs it can be hard to reduce your food bill — but not impossible. Use these five tips to help curb grocery bill inflation.
The average family of four throws out 140 kilograms of food — with an approximate annual cost of $1,300 per year.(40) To avoid this waste, experts strongly advise that all grocery shoppers avoid stepping foot into a grocery store until they have a meal plan (and a shopping list).
A meal plan helps to accomplish two things:
Create a meal plan by examining flyers, your current fridge contents and what is in your pantry. If finding recipes with various ingredients is difficult, consider using an app. Popular (and free) options include the AllRecipes Dinner Spinner or Supercook.
In combination with a meal plan, a shopping list helps to minimize the impact of rising food costs. According to research from the University of Pennsylvania, shopping without a list can increase your grocery bill by 23% due to unplanned purchases.(41)
For those trying to combine food savings with a smaller footprint on the environment, one good option is to consider going meatless.
Canadians spend just under $1,500 on meat each year. Skip the meat aisle and the average Canadian could save more than $120 per month.(42)
Consider making the money you spend on groceries work for you. A simple way is to opt-in to store rewards or shop using a credit card with higher reward incentives for food purchases. The key is to be sure that any credit card used actually saves you money and doesn’t add to your overall costs (either with an annual fee or a high interest charged on monthly balances). Since no single credit card is the best choice for every single consumer, it pays to compare your options.
Compare the best credit cards for groceries
These days just about every store and card has a loyalty program, plus there are stand-alone apps with great incentives. For instance, Flipp helps identify the lowest price on grocery staples you flag in the app, while Flashfood lets Superstore shoppers buy heavily discounted food that are perfect for immediate use.
34 of the best money saving apps
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