Experts say Canadian presence of Walmart and US retail giants costco Rising grocery prices are unlikely to be to blame.
This is despite pressure from lawmakers at the Canadian grocery chain to question those retailers as part of their study on food inflation.
University of Toronto economist Ambareesh Chandra called the ongoing hearing before a parliamentary committee studying the issue “demonstrative”, saying that all retailers seek to maximize profits despite their stated efforts to reduce price increases.
“It’s easy to call out foreign companies and explain to them why they are robbing hardworking Canadians,” Chandra said.
“It’s not that American grocers are taking advantage of Canadians and Canadian grocers aren’t. Grocers are going to charge what they can find, what the market will bear.”
His comments come as Canadian grocers and consumers come under pressure as food prices have skyrocketed in recent months despite a decrease in overall inflation.
Grocery prices rose 10.6 percent in February from a year earlier, while overall inflation stood at 5.2 percent. Grocery inflation was down from a year-over-year increase of 11.4 percent in January.
Walmart Canada President and Chief Executive Gonzalo Gebara told a parliamentary committee on Monday that his company is not trying to profit from food inflation. Instead, he insisted that it was trying to maintain a price difference between its products and those sold by its competitors.
He said the gross profit margin for Walmart Canada’s own food business and its total operating profit in dollars declined last year.
Gebara’s testimony followed a highly-anticipated March 8 committee meeting in which the heads of Metro Inc. and Empire Co., two of Canada’s three largest grocery chains, asked lawmakers to answer questions for their research. Why not call on the American retail giants. food inflation.
The committee then agreed to invite the leaders of the Canadian branches of Walmart and Costco to speak unanimously.
Pierre Riel, Costco’s senior vice president and country manager for Canada, is scheduled to appear before the committee on April 17. A Costco spokeswoman did not respond to a request for comment on Reel’s upcoming appearance.
Canadian grocers, including Loblaw chairman and president Galen Weston, told the committee earlier this month that food inflation is not being caused by profiteering, stressing their margins on food remain low.
But Chandra said the framing is only “window dressing”.
“We’ve seen blatantly bad behavior from these grocers over the years, whether it’s pricing or other kinds of reprehensible issues, like coordinating on reducing pay for cashiers during the pandemic — all of these things stem from the fact That we don’t have enough competition,” he said.
“We should focus on encouraging competition, and one way to do that is to actually have more foreign grocers in the country. So, Walmart’s presence is actually good for Canada in the long run, not bad for it.
Simon Somogyi, an agribusiness researcher at the University of Guelph, said Walmart and Costco are larger companies than Canadian grocers, which gives them the ability to source products in greater quantities, ultimately allowing them to sell at lower prices.
“Their inclusion in our retail landscape is important and allows consumers to have choice about where they want to put their money,” he said.
“Typically, their motto is ‘Come to us because we sell in bulk, usually at lower prices than our competitors.'”
He added that “any competition coming into the market is welcome” to help keep costs down.
Canadians are going to the grocery store less as food inflation continues to rise: report
Factors such as historically high commodity prices as well as higher costs for delivery, packing and labor are still contributing to rising grocery bills, but experts have said they expect food prices to level off by the end of 2023. Growth will be normal.
Somogyi said the public would benefit if the ongoing committee hearings lead to increased transparency around the mechanisms that lead to increased costs for suppliers.
“The hearings we’re seeing are really from a consumer perspective, why are prices going up? I would expect, in some ways, to have a much greater discussion about how supplier prices are determined,” he said.
“The two are intertwined, but the dramatization we’ve seen in this hearing hasn’t really gotten to the bottom of it.”
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