Growth in the price of groceries slowed in January in tandem with a drop in the headline inflation rate, according to Statistics Canada, but a food expert says the fight between parliament and the country’s largest grocers is far from over.

The growth in prices for food purchased from stores last month declined to 3.4 per cent year-over-year, compared to 4.7 per cent in December, according to StatCan’s latest Consumer Price Index (CPI) reading.

“Things are easing for sure,” Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University told BNN Bloomberg in a Tuesday interview following the CPI release on Tuesday.

“If you talk to food companies, they are seeing the same thing; supply chains are much easier to manage right now, and margins are more predictable, so it's not surprising that we're seeing consumers benefiting.”

A number of other CPI categories also saw subdued price growth as Canada’s headline inflation rate fell to 2.9 per cent in January from 3.4 per cent the month before.

StatCan said that while grocery prices remain “elevated,” there was a broad-based easing in price growth across many categories including meat, dairy and fresh fruit, while some food items, such as soup and bacon, saw price declines last month.

Grocery code of conduct

Despite Tuesday’s encouraging CPI release, Charlebois said the dispute between parliament and Canadian grocers over high prices is likely to continue, adding that MPs are “running out of patience.”

In the latest development, a House of Commons committee tasked with examining food prices in Canada urged major grocers Loblaw and Walmart to sign on to a voluntary code of conduct on Friday, or risk having it made mandatory.

Both companies have said they wouldn’t sign the code as currently written, saying it could lead to higher prices at their stores. 

“Everyone agrees that a code of conduct would actually help to increase competition overall, and we all know now that both Loblaw and Walmart are not necessarily adhering to a voluntary code,” Charlebois said.

“Without the two big players, I don't think a code would actually work in Canada, which is why MPs are really pressuring those two companies.”

The code, written by industry stakeholders, was drafted with the aim of creating a set of rules for fair dealings in negotiations between suppliers and grocers.

The code’s proponents say it would level the playing field both for suppliers and smaller grocery companies, as large grocers like Loblaw and Walmart currently hold too much negotiating power.

“A lot of people think that the code is about government intervention – it is not,” Charlebois noted.

“It is not about price fixing, it's really more about creating a level playing field and giving a chance for suppliers to survive and to have a shot at the market.”

Consumer habits

Charlebois said that most Canadian consumers remain “desperate” for grocery savings, and that shoppers have increased their trips to the store and expanded the number of grocers they visit in search of better affordability.

“People are going to the grocery store way more often. The frequency rate for grocery businesses has gone up 32 per cent in the last six years,” he said.

“What that means is that people are just bargain hunting a lot more – they're visiting more grocery stores.”

Charlebois said that as shoppers “expand their portfolio” of stores that they frequent, grocers will need to offer more generous loyalty programs and deals to entice consumers to stick around.

With files from The Canadian Press