The high cost of living is affecting Canadians’ ability to access healthy food
Canada appears to be a “trading-down” market, a trend that may persist for some time. Recent data from Statistics Canada on the food retail and service industries and fresh GDP figures paint a dismal picture, especially for those looking to attract more food companies or grocers to our country.
Our population grew by over three percent last year, yet our GDP increased by less than one percent. While other industrialized economies, such as France and Germany, are experiencing worse economic headwinds, Canada’s economy is highly integrated with the United States, the world’s most robust economy at present.
Despite our proximity to this economic superpower, the benefits of our geography seem to have stalled. The most alarming aspect of the January GDP numbers is that Canada’s hottest economic sector is currently the public service, while private investments have stalled, primarily due to higher interest rates.
The gap in GDP per capita between Canada and the U.S. has widened by 106 percent since 2015, and this trend shows no signs of reversing. In other words, despite our growing population, Canada is becoming poorer, not richer.
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For those in the food business, this is certainly not good news. Statistics Canada’s reports on food and service sales confirm that consumers are less wealthy while facing higher food and menu prices. As of January 2024, the average Canadian spends $248 a month on food retail sales per capita, down from $258 in January 2023 to $282 in February 2017. These figures are all in real dollars, which makes the situation even worse.
Based on Canada’s Food Price Report 2024, an individual’s monthly expenditure for a healthy diet should be $339. Again, the current average monthly spending is $248. Until July 2021, Canadians spent more on average than the desired budget to support a healthy diet. Since then, it has clearly been a challenge.
Canadians are either wasting less or finding alternative ways to source food outside conventional channels like grocery stores, such as dollar stores and non-traditional grocery discounters. Per capita, food expenditures in our country have never been as low as they are now.
One might think that grocers are struggling with this situation, but they are readjusting their strategies and putting more pressure on suppliers with higher fees and lower prices. These are perfect conditions for a potential price war later this year, so don’t be surprised if it happens.
The data on food service provides a different perspective. On average, Canadians spent $169 at restaurants in January, about the same as last year and an increase from $149 in January 2018. However, these sums are in real dollars. The current retail/service split in Canada is that about 41 percent of all money spent on food is at restaurants, compared to a split closer to 54 percent in the U.S., favouring food service. Given the market’s frugality, it’s surprising to witness such substantial spending at restaurants, where you usually get less value for your money.
The days of uncertainty regarding the balance between working from home and working away from home are long gone. The food economy has, for all intents and purposes, normalized. Food inflation is causing Canadians to spend less at grocery stores, which may seem counterintuitive, but this is what the data is telling us. Currently, about 18 percent of all retail dollars are devoted to food, compared to 21 percent in 2017.
Simply put, the cost of living is a problem for many Canadian households, and trading down is much easier with food. People may be “ordering in” more often to avoid tips and overpriced beverages, for example.
All of this is based on our trust in Statistics Canada, which may not be all that strong. However, Statistics Canada is merely an indicator, and Canadians have no other way to know what is really going on out there other than reading reports from the federal agency. Regardless of how we interpret the data, the numbers are not encouraging.
This is what happens when our population grows, but our collective economic wealth stagnates.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.
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