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Canadian food inflation: International dynamics and local agency

Author

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  • José G. Nuño‐Ledesma
  • Michael von Massow

Abstract

We offer a descriptive analysis of the complexities surrounding food price inflation in Canada three years after the outbreak of COVID‐19. The Consumer Price Index and its food component have registered significant shifts since 2020 and remain elevated. This behavior is influenced by international dynamics, such as the conflict between Russia and Ukraine and the consequent commodity price surges, and domestic factors, including grocery market concentration. As external events interact with local policies, business practices, and the structure of the food retail industry, debates around market competition intensify. We posit that while the influence of international factors on local prices is undeniable, fostering domestic grocery competition remains crucial. At the same time, managing expectations of major price reductions in a small open economy like Canada's is important. In addition, we discuss some of the research and data needs that have become salient during the current inflationary episode. Nous proposons une analyse descriptive de la complexité entourant l'inflation des prix alimentaires au Canada trois ans après l'épidémie de COVID‐19. L'Indice des prix à la consommation et sa composante alimentaire ont enregistré des changements importants depuis 2020 et restent élevés. Ce comportement est influencé par des dynamiques internationales, telles que le conflit entre la Russie et l'Ukraine et la flambée des prix des matières premières qui en a résulté, ainsi que par des facteurs nationaux, notamment la concentration du marché des produits alimentaires. À mesure que les événements externes interagissent avec les politiques locales, les pratiques commerciales et la structure du secteur de la vente au détail de produits alimentaires, les débats autour de la concurrence sur le marché s'intensifient. Nous postulons que même si l'influence des facteurs internationaux sur les prix locaux est indéniable, il reste crucial de favoriser la concurrence dans le secteur alimentaire national. Parallèlement, il est important de gérer les attentes de réductions de prix importantes dans une petite économie ouverte comme celle du Canada. En outre, nous discutons de certains besoins en matière de recherche et de données qui sont devenus essentiels au cours de l'épisode inflationniste actuel.

Suggested Citation

  • José G. Nuño‐Ledesma & Michael von Massow, 2023. "Canadian food inflation: International dynamics and local agency," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 71(3-4), pages 393-406, September.
    • Handle: RePEc:bla:canjag:v:71:y:2023:i:3-4:p:393-406
    DOI: 10.1111/cjag.12341
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    References listed on IDEAS

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    1. Bouras, Panagiotis & Bustamante, Christian & Guo, Xing & Short, Jacob, 2023. "The contribution of firm profits to the recent rise in inflation," Economics Letters, Elsevier, vol. 233(C).
    2. Kateryna Goychuk & William H. Meyers, 2014. "Black Sea and World Wheat Market Price Integration Analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(2), pages 245-261, June.
    3. Brian M. Dillon & Christopher B. Barrett, 2016. "Global Oil Prices and Local Food Prices: Evidence from East Africa," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(1), pages 154-171.
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    1. Cortney Cowley & Jacob Dice & Amaze Lusompa & David Rodziewicz & Francisco Scott, 2024. "The Passthrough of Agricultural Commodity Prices to Food Prices," Research Working Paper RWP 24-16, Federal Reserve Bank of Kansas City.

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