Feds calls on major grocers to stabilize food prices, drawing industry pushback

The federal government is demanding major Canadian grocers come up with a plan to stabilize prices, drawing pushback from the food industry.

Prime Minister Justin Trudeau on Thursday said the call comes as Canadians continue to struggle with inflation.

“Large grocery chains are making record profits. Those profits should not be made on the backs of people who are struggling to feed their families,” he said, speaking in London, Ont., following a caucus retreat.

He said the government will be asking the five largest grocery companies including Loblaw, Metro, Empire, Walmart and Costco to come up with a plan by Thanksgiving.

“If their plan doesn’t provide real relief for the middle class and people working hard to join it, then we will take further action and we are not ruling anything out including tax measures.”

The call comes as grocery prices rose 8.5 per cent in July, showing a slight easing of price growth but still running much hotter than overall inflation.

 

Major grocers have been facing accusations of profiteering amid high inflation, though executives from Loblaw, Metro and Empire denied these allegations before a parliamentary committee studying food inflation earlier this year.

The Retail Council of Canada said in a statement Thursday that grocer prices and profits have nothing to do with rising food prices, pointing instead to higher costs being passed on from food manufacturers and producers.

The group said that any discussions on food pricing need to also include processors, manufacturers and other relevant businesses in the supply chain.

“We are not going to take part in discussions that time and time again fail to look below the surface as to the true cause of rising grocery prices.”

Industry Minister Francois-Philippe Champagne, who is taking the lead on the grocery price push, said at Thursday’s press conference that the government would also be engaging other segments of the food industry.

“We’re going to start with the five largest grocers in Canada represent about 80 per cent of the market, and we’re going to be in solution mode with very clear deadlines and very clear outcomes for Canadians. And together we’re going to look also at large food processors,” he said.

“We’re going to bring them in Ottawa, talk to them around meaningful action and if they fail to do so there’ll be consequences.”

Anthony Fuchs, spokesman for the Food, Health & Consumer Products of Canada, which represents food producers, said in a statement that both the timing of the announcement and the threat of tax measures was concerning.

“We believe that using taxation as a punitive measure on retailers, especially at this time, is not only ill-advised but might have a detrimental ripple effect on the whole food supply chain, including food producers,” said Fuchs.

“Today’s announcement, which proposed a broad approach to a nuanced issue, may lead to unintended consequences.”

This article was reported by  The Canadian Press