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This is such a dumb headline.
The rate of price increases slowing doesn't mean that prices go down. It means that prices increase more slowly.
ETA: we aren't experiencing deflation. And we probably don't want to.
doesn’t mean that prices go down
But, to be fair, they are going down. The price I can get as the farmer is 30-50% of what it was last year.
You're still paying more at the grocery store because what you are eating now, I sold you last year (maybe even the year before). Turns out people don't like surprises when it comes to food, and want to ensure that we grow enough to feed them, so they generally buy it years in advance.
Your price might go down, but that's because you have the least amount of leverage. Same applies to customers, and to any smaller entity in the supply chain.
I'd also note the LCL, Empire and Metro didn't hesitate to push on supplier increases, but also didn't hesitate to raise resale at the same time. Most of them are seeing increased margins and they're all seeing higher profit, which, if we had a fair tax structure, wouldn't happen.
I work in distribution. Other than select contract negotiations at very high volumes, I can't think of the last time I saw a price decrease go through, though I will say our fuel surcharge at least isn't going up. So the rate of increase is slowing, but resale prices, by and large, are not going down. At best, this is the "new normal"
I can’t think of the last time I saw a price decrease go through
Somewhere in the mid-2010s, I'd imagine. Prices have been relatively stable or increasing since, save recently. It's still a little early for the rest of the chain to start to feel it, but it will come. It always does.
In fact, with respect to the economy at large, only once in history has a period of high inflation not been quickly followed by deflation – and that period was unique in that, unlike the usual supply shocks, the driving force – a sudden, sharp rise in the number of consumers (i.e. the boomers coming onto the scene) – never really went away.
It all takes time, though. Nothing happens in a day.
Agreed! ...and you made a smart observation about prices.
All of those reasons are BS if grocery stores are still posting record profits.
Edit: grammar
Because retailers took advantage of inflation to push profits even higher, especially one specific retailer who has a vertical monopoly in the grocery sector, of which they’ve been caught and convicted of using to fix the prices of bread in the past.
They’re still high because food is a staple, a necessity. Competition can’t spin up in several months. And competition certainly can’t compete with this existing farm to grocer system.
These prices are never coming down. They’d keep going higher if people weren’t so angry they were stealing instead.
The best protest is to not shop there.
I know. Sounds stupid.
Farmers stands. Farm to table markets. Farmer’s markets.
Call farms and see if you can place orders. They need larger orders? Start ordering with friends, neighbours, family.
This stuff is grown in our backyard, and we are paying for some guy to buy it to sell to some other guy for a huge mark up so we can pay even more for no reason.
https://beta.ctvnews.ca/national/business/2023/4/5/1_6344721.amp.html
Tale as old as time. Prices go up. CEO pay goes up. Wages go down. It's a real head scratcher.
How do I not shop there when I only have 2 options. Do I just stop eating ?
Well, you kind of accept that you don't have options for anything when living in the extreme north of Canada.
The remaining ~99% of Canadians live amongst farmers, though. We've built our largest cities on literally the best farmland in the country to ensure that the food is right there. They have thousands of options.
What do you mean 99% of Canadians love amongst farmers . The vast majority of Canadians live in the city no where near a farm . I live in NB so definitely not extreme north .
My car stopped accelerating. Why am I still going so fast?
Good analogy. Inflation is a rate of change.
so why are grocery prices still so expensive?
Capitalism.
"Inflation" is just the polite way of saying "if billionaires find out you've still got money, they'll fuck you out of that too".
It's apparently why we can't just raise wages or give useful amounts of welfare to the people who need it. We have to sneak the money to people, lest the billionaires find out.
TLDR; climate change, Russia, supply chain not recovered, labor shortages; more price increases expected :/
You list all the reasons but the one that actually matters and is responsible for all of the others: capitalism.
Why do people find it so hard to say/admit?
Under capitalism we don't produce food for the purpose of feeding people, we produce it to make a profit. If a person can't afford to buy food, we let the person starve and the food rot on the shelf.
Back when I worked in a grocery store one of my regular tasks was processing unsalable product. There is... a lot that gets thrown away. And from what I hear it is much worse in other parts of the world.
I used to work in cold storage distribution for Loblaws. There is even so much more thrown out before it gets to the store, we had a giant bin that would get emptied once our twice a week. Someone eventually organized something to donate discarded produce to the local shelters and the zoo I think so at least it wasn't going to waste, hopefully they are still doing that.
Oh, it’s a TLDR of the article, not my opinion.
The grocery stores record profits make it obvious they have more than enough room to absorb a lot of the upstream pressure for price increases. They don’t feel compelled to do so in any way though :/
Sorry, I should have been more clear, my criticism isn't of your TL;DR, it's of the fact that it didn't include capitalism (which I understand is because the article doesn't, which is what I'm criticising).
The margins have grown considerably in the past year, yes, but they also know what's coming. Make hay while the sun shines.
They actually do address it. By handwaving it away with practically no analysis. This article might as well be paid for by the grocery industry.
BIG GROCERS DICTATING FOOD PRICES Many Canadians have pointed the finger at big corporations for how expensive groceries have become over the past few years, but Huggins said the issue of high food prices is a bit more complex.
In Canada, five retailers — Loblaw, Sobeys, Metro, Walmart and Costco — control an estimated 80 per cent of the grocery market share, according to a 2021 study from the federal government.
As Huggins pointed out, these companies make up an oligopoly, which is a market dominated by a small group of suppliers, so they are able to exercise their power in the market and have “very protected profit margins.”
However, he said there hasn’t been much evidence of them abusing their power in the market to drive up food prices in the last two years.
“In the early days of the pandemic, there was some jockeying for price increases, mostly because there were big supply disruptions happening, but we haven't seen an enormous amount of it,” he added.
“They've certainly been able to prevent their profits from coming down, but I haven't seen a lot of exploitative size numbers.”
Came here to say the same. Greed.
No matter what the inflation rate prices will not go down, for prices to go down you need deflation which is not likely to happen. Prices will always go up, it's just the speed of which they go up that changes.
We saw deflation as recently as 2020. Prices do not always go up.
Moreover, every single high inflationary period in history, save one time, has seen deflation occur soon after. Why do you think this will be the second outlier, especially when the driving forces are closer to every other time and quite unlike that one unique time?
To be fair, 2020 was a little weird.
It was, but we also saw deflation in 2009. It is less common for us to see than inflation, to be sure, but it is far from something that never happens. On average, we experience it about once every decade. No doubt it will be twice this decade by the time we reach the end.
A lower Inflation rate doesn’t equate to lower prices. It equates with those prices not rising as much and as fast…but as long as the rate is positive, those prices are still going up.
True, except the rises so far have been much larger than inflation warrants, with the expectation for a correction at some point, which is what the article discusses.
Until the conflict in Ukraine is resolved, I’d expect those prices to still be up. Wheat and oil being impacted in that conflict have major repercussions across the supply chain across the world.
Wheat today is only worth half of what it was last year.
I expect the prices to still be up only because it takes a while to work through the system. Similarly, it took a while after farm gate prices started climbing over the past several years before prices at the store started going up. Give it another year and things will look quite different, even if the Ukraine conflict persists.
Corporate profits
Economists say there are a number of factors driving up food prices
GREED. The answer we were looking for is greed. Thanks for playing.
That TL,DR is missing the actual reason... Extended pandemic profiteering to "get even" with consumers for staying inside for half a week and not shopping at their fullest potential.
Capitalists are quoted as saying, "we will be made whole, and then some, and you'll apologize for what you did to us."
because groceries price increases were because of companies getting rich, and not inflation.
/story
Yep. It's an oligopoly
Inflation is not prices, it's a rate of increase of prices. Even if Inflation is at 0%, prices won't decrease, 0% mean prices stability. To see prices diminish, Inflation would need to be negative, in that case it's depression.
Inflation is not prices, it’s a rate of increase of prices.
Inflation attempts to measure the decreasing value the of currency as observed over time. The change in price across a certain basket of goods is the proxy used to determine that.
Even if Inflation is at 0%, prices won’t decrease
All else equal, a decline in value of the currency means that price will rise. However, there are two sides to every transaction. The thing on the other side may also decrease in value. If that other thing decreases in value faster than the currency, then it is possible for inflation to be >=0% and for the price to still fall.
What is Late-stage Capitalism, Alex?
This is the best summary I could come up with:
With extreme weather events like droughts, wildfires and flooding becoming more frequent in Canada and around the world, as a result of climate change, Fan said farm production and supply chains are impacted, applying some pressure on overall food inflation.
Extreme weather is one of the major threats that RBC has identified for food inflation for the upcoming decade, Fan noted, because it will likely lead to “a lot more volatility and uncertainty.”
Russia’s invasion of Ukraine in February 2022 resulted in additional upward pressure on global food prices due to the role the two countries play in agricultural and oil production.
In Canada, five retailers — Loblaw, Sobeys, Metro, Walmart and Costco — control an estimated 80 per cent of the grocery market share, according to a 2021 study from the federal government.
“It takes all these things to start to normalize — the supply chain, which it did since late 2021, wage growth in Canada is still kind of elevated at the moment, … the impact on commodity prices from the Russian invasion to Ukraine.”
“My best assessment is that things will get a little bit better than they are based off of conditions that they are at the moment and so they'll slow down, which will be nice, quite frankly, because there's a lot of people who are remarkably angry about prices that have sort of risen in the last few months,” he said.
I'm a bot and I'm open source!
Corporate billionaire/millionaire wealth tax now.
I would imagine part of it is related to the same reasons why my business’s prices are still high: rapidly rising insurance and increased costs of materials due to supply lines that were negatively impacted due to the slow down that was caused by COVID.
I’ve had literally dozens of customers in the last two years look at my quotes, balk and then go shopping for a better deal only to come back to me when they realize this is the new normal. Then they have to deal with the fact that contractors like me are booking new projects for 2025-26.
See I have a feeling the bullshit is coming further upstream. The core providers are using covid to gauge business further down, then the smaller businesses are passing on the cost and in some cases adding even more on top because of "covid".
The whole thing smells to high heaven as the assholes at the top are making money hand over fist.
The buyer sets the price. Inflation tells half the story, but the other half is that the people generally believe that things like food are worth more now. When the Ukraine conflict began, people started seeing famine as a real threat, which put them in "Oh shit, I'd better not take this thing for granted anymore!" mode.
I think your comparison of your industry to the grocery industry likely isn't particularly akin, the grocery industry is much more...peculiar, or at least idiosyncratic than most, which is illustrated by the price of groceries not being in line with inflation.
the grocery industry is much more…peculiar, or at least idiosyncratic than most
In what way?
Frankly, the grocery industry is one of the least idiosyncratic markets around.