An economist says Canadians may find grocery prices leveling off as supply picks up, demand cools, and a stronger dollar and paused tariffs help ease pressure.
Concordia University economist Moshe Lander says grocery prices, especially for fruits and vegetables, are expected to stabilize in the coming months, with only slight increases.
“So no major drop, but maybe a little stabilizing or a little bit of inflation, yeah, and that would be in line with the rest of the economy as well,” he told CityNews.
He says a stronger Canadian dollar is helping shift demand back to locally grown produce, now becoming available with the start of the growing season. On Wednesday, the Canadian dollar traded at US$72.53, an increase of 4.3 per cent.
“It is possible that the increase in supply that would come from now Canadian producers starting their growing seasons, a stronger dollar would naturally discourage buying foreign goods and shift towards domestic goods, which would now be available which weren’t before,” he said.
“You could imagine then that prices would fall.”
According to Statistics Canada, the March Consumer Price Index (CPI) for food was 3.2 per cent, up 0.1 per cent from last month but a continued decline from a peak of around 11 per cent in 2022.
With inflation dropping to 2.3 per cent in March, Lander doesn’t believe there will be a dramatic decrease in food prices even with a stronger dollar; rather, there would be some mild changes. Additionally, supply chain contracts are done months in advance and are immune to inflation until they are renegotiated.
“If you told me that they were falling and falling aggressively, I would, in fact, be surprised, because the Canadian dollar hasn’t strengthened that much,” Lander noted.
He also says there may be expectations from Canadians wanting pre-COVID level prices with lower inflation.
“I think the big disconnect that Canadians are having right now is that, having heard that inflation is back under control, they go to the grocery store and they say, ‘I don’t see prices falling, I just see that they aren’t rising as quickly as they used to.’ And so it’s to fundamentally misunderstand what inflation is,” Lander said.
“Low inflation means prices are not rising quickly. High inflation means that they are rising quickly. On average, we could still continue to see that prices are rising, just maybe not as quickly as they have been in the past.”
Another factor is that U.S. tariffs on Canadian imports have been paused for 90 days, buying importers some time and easing pressure on prices.
And with the federal government recently pulling back on immigration targets, Lander says overall demand for food could decline slightly, another reason for prices to level off.
“If there’s not as many people around in Canada, then while it’s not a substantial factor in the story, there is going to be a decrease in the demand for food overall, and so that could take away some of that inflationary pressure,” he said.
But while we may not see costs drop dramatically, Lander says the days of sharp spikes appear to be behind us — at least for now, until the economy changes or Trump’s tariffs kick in.
