Canadian food prices increased significantly more than the overall inflation rate during the past year, Statistics Canada has reported.
Increases were particularly high in fruit, meat and grain-based products.
As well, the head of one of the world’s largest food manufacturing companies is predicting a substantial and long-lasting increase in food prices.
According to Reuters News Agency, Nestlé chief executive officer Peter
Brabeck said food prices will increase as Chinese and Indian demand for food rises and the biofuel industry consumes more of the world’s grain and oilseed stocks.
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“They will have a long-lasting impact on food prices,” he said.
On July 18, Statistics Canada reported that while the overall consumer price index in June was 2.2 percent above 2006 levels, food prices on average increased 3.1 percent.
Fresh fruit costs led the way with a 15.5 percent increase, often involving imported products.
Average meat prices were 4.6 percent above year-earlier levels, led by poultry price increases of more than eight percent.
Milk prices rose by 4.6 percent, more than twice the rate of inflation. The Canadian Dairy Commission increases dairy support prices annually, which increases the cost of dairy products. Bread prices were on average 5.7 percent higher in June 2007 than a year earlier.
The consumer price of vegetable oil increased 3.7 percent, significantly above the general inflation rate, according to the federal agency.
Food industry analysts predict that higher grain and oilseed prices this summer will translate into significant retail food price increases by late 2007.
According to Statistics Canada, the overall national inflation rate during the past year dropped in part because of the impact of the 2006 one-percentage-point cut in the GST.
A stronger Canadian dollar also helped reduce the cost of imports for Canadians because imports often are priced in American dollars.
Rising housing and rental costs were major influences on the inflation rate.
Despite the economy’s steady performance, the Bank of Canada says the core inflation rate is rising and a strong Canadian economy should be cooled by higher interest rates.
