Food prices forecast to rise up to 5% in 2021: Report

The pandemic will continue to hit Canadians in the purse strings next year.

Overall food prices are expected to increase 3% to 5% in 2021, according to the 11th annual edition of Canada’s Food Price Report, a collaborative effort between Dalhousie University and the University of Guelph, as well as two new partners this year: the University of Saskatchewan and the University of British Columbia. The study uses predictive analytics models applying machine learning to support the analytical process of determining the future of food prices.

In 2020, COVID-19 posed major challenges to the global food system and Canadian supply chains. The report notes that the pandemic resulted in shifts in consumer demand, slowdowns and closures of plants and distribution centres, labour shortages and logistics disruptions—all which drove up food prices.

“I don’t think it’s going to change, unfortunately,” says Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University. “Some of the challenges related to COVID-19 will continue into the new year.”

The report predicts the annual food expenditure for a family of four (two adults, two kids) will be $13,907—an increase of $695 or 5% compared to 2020, excluding money spent on foodservice. In dollars, that’s the highest predicted increase by Canada’s Food Price Report since its inception.

To reflect the diversity of Canadian households, this year’s report predicts annual expenditure increases based on individual consumers of different genders and ages. For example, a man 31–50 can expect to pay $169.49 more for food compared to 2020, while a woman of the same age can expect to pay $152.08 more.

Meat and vegetables will see the highest price increases, with both categories at 4.5% to 6.5%. That’s followed by bakery (3.5% to 5.5%); restaurants (5%); fruits and “other” (both at 2% to 4%); seafood (1.5% to 3.5%); and dairy (1% to 3%).

While the virus will continue to impact food prices, the report notes that those along the food-supply chain learned valued lessons and may be more adaptable to future challenges. For example, grocery retailers are investing more in their e-commerce capabilities.

“The silver lining is that many grocers are better equipped to sell online, which is now perceived as the safest way to do anything,” says Charlebois. “So, consumers are going into the new year with more options.” For retailers, he adds, “it’s really about anticipating behaviour and how consumers will react to whatever is happening.”