US retail giants aren’t making Canada’s food inflation worse than Canada’s, experts say – National
Experts say that the presence of US retail giants like Walmart and Costco not likely to blame the increase in grocery prices.
That’s despite Canadian grocery chain executives pushing MPs to question those retailers as part of their research on food inflation.
University of Toronto economist Ambarish Chandra has called the ongoing hearings before the congressional committee studying the matter “productive,” saying that all retailers seek to maximize profits. despite their stated efforts to minimize price increases.
“It’s easy to call foreign companies and ask them to explain why they are running away from hard-working Canadians,” says Chandra.
“It is not that American grocers are taking advantage of Canadians and that Canadian grocers are not. Grocery stores will charge what they can afford, what the market will bear.”
His comments come as Canadian grocers and consumers are under pressure as food prices continue to soar even though inflation has generally eased in recent months.
Grocery prices rose 10.6% in February from a year ago, while overall inflation was 5.2%. The grocery inflation rate fell from an 11.4% year-over-year increase in January.
Walmart Canada President and CEO Gonzalo Gebara told a congressional committee on Monday that his company is not trying to profit from food inflation. Instead, he emphasized that they are trying to maintain a price gap between their products and those sold by competitors.
Walmart Canada’s gross margin for its food business and total operating profit in dollars fell last year, he added.
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Gebara’s testimony comes after a highly anticipated committee meeting on March 8, in which the heads of Metro Inc. and Empire Co., two of Canada’s three largest grocery chains, questioned why congressmen did not call on the US retail giants to answer questions for their research on inflation. Food.
The committee then unanimously invited the leaders of Walmart and Costco of Canada to speak.
Pierre Riel, Costco’s senior vice president and country director for Canada, is scheduled to appear before the committee on April 17. A spokesman for Costco did not respond to a request for comment. Riel’s impending arrival.
Canadian grocers including chairman Loblaw and chairman Galen Weston told the committee earlier this month that food inflation is not driven by profit, insisting that their margins for with food remains low.
But Chandra says the framing is merely “window decoration”.
“Honestly, we’ve seen bad behavior from these grocers over the years, whether it’s price fixing or other scandalous issues, such as coordinating employee pay cuts. cashiers during a pandemic _ all of this comes from the fact that we don’t have enough competition,” he said.
“We should be looking at encouraging competition, and one way to do that is to actually have more foreign grocery stores than in the country. So Walmart’s presence is actually good for Canada in the long run, not bad for it.”
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Simon Somogyi, an agribusiness researcher at the University of Guelph, added that Walmart and Costco are bigger players than Canadian grocers, which gives them the ability to source products. in larger quantities, ultimately allowing them to sell at a lower price.
“Bringing them into our retail landscape is critical and allows consumers to choose where they want to put their money,” he said.
“Usually their motto is ‘come to us because we sell in bulk, at prices that are often lower than our competitors”.
“Any competition that may appear in the market is welcome” to help keep costs down, he said.
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Factors such as high delivery, packaging and labor costs, along with record-high commodity prices, are still contributing to rising grocery bills, but experts say they expect food prices to normalization by the end of 2023.
If the ongoing committee hearings bring more transparency around the mechanisms that lead to increased costs for providers, Somogyi said it would benefit the public.
“The hearings we have seen really revolve around the question, from a consumer perspective, why are prices going up? In a way, I hope there will be a lot more discussion about supplier pricing,” he said.
“The two are linked, but a lot of the stage we’ve seen in this hearing hasn’t really gone into that.”
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