Canada’s largest grocer to freeze prices amid accusations of profiteering | Canada


Canada’s biggest grocer has announced a price freeze on its range of low-cost goods, amid accusations of profiteering from a worsening cost of living crisis – and an impending parliamentary inquiry into the food retail industry.

Wednesday’s inflation figures showed food prices in the country rose 11.4% from a month ago, continuing a rise not seen in more than four decades.

Energy and housing costs have skyrocketed in recent months, but Canadian political leaders have focused their sharpest attacks on the country’s three grocery stores, calling for their increased profits amid an economic downturn. high inflation.

Earlier this week, Loblaw Companies – which owns more than 20 grocery and supermarket chains – said it would lock in prices for its “no name” private label, which includes more than 1,500 grocery items, until as of January 31, 2023.

Company chairman Galen Weston touted the move as a way to temporarily shield customers from the effects of inflation, writing that the costs were “maddening” beyond his control.

“A lot of Canadians are struggling right now and it was important for a grocer to show empathy to the public,” said Sylvain Charlebois, professor of distribution and food policy at Dalhousie University. “But it came about a month too late and the day Parliament decided to vote on an inflation inquiry.”

Others called the move a publicity stunt.

“This announcement confirmed that supermarkets have leeway in setting prices. They are not just innocent middlemen forced to pass on rising input costs to consumers and they are actually making strategic decisions about prices and what the market will bear,” said Jim Stanford, economist and director of the Center for Futurework.

Rival grocery chain Metro called Loblaw’s decision an “industry standard.” Metro did not immediately announce it would follow suit, but the mere suggestion that it could spark accusations of potential price-fixing in a country where top grocers have previously admitted to colluding over the price of bread for over a decade.

“It absolutely confirms what we already know about the grocery business — it’s a cozy oligopoly,” Stanford said. “Explicitly or implicitly, the big three chains that dominate the industry in Canada cooperate all the time – not only to set consumer prices, but also to set supplier prices and access to suppliers, and of course, to set workers’ wages.

Loblaw Companies did not respond to a Guardian request for comment on the timing of the announcement, but told Canadian media in a statement that their decision to freeze prices was “unprecedented”.

In 2018, the country’s competition bureau found that grocers and bread companies colluded to fix prices, resulting in millions in fines.

The country’s three main grocery chains (two of which are controlled by billionaire families) caused more anger in 2020 when they pledged to offer frontline workers a ‘hero’s pay’ boost during the coronavirus pandemic – to end the program a few months later.

NDP leader Jagmeet Singh has become the industry’s harshest critic, alleging it is driven by “greed”.

“Just a reminder – the top three grocery stores have reported total net profits of $2.3 billion in 2022 so far. That’s $228 million more than the year before – $228 million than they took you as a consumer,” Singh tweeted. “CEOs use inflation to hide their greed.”

Singh also wrote that it was ‘no coincidence’ that Loblaws made its announcement shortly before Parliament voted unanimously to hold hearings into corporate profits – including the oil industry. grocery.

“The pressure is working,” he tweeted.

An economist says grocery stores have benefited from the pandemic and inflation — but not in the way the public often suspects.

“Complex issues are often grossly simplified by politicians,” said University of Calgary professor Trevor Tombe. “And complex issues require much more nuanced policy responses.”

Tombe points to industry profit margins, which have fallen in the last quarter.

The explanation behind the recent surge in profits that has infuriated lawmakers, he said, is people buying more groceries. Rising costs have changed spending habits, which means people are cutting back on certain luxuries, like eating out. Instead, they buy more groceries.

Tombe said the industry’s poor outlook — a history of admitted collusion and billionaire families controlling the nation’s biggest grocery chains — doesn’t help.

“Inflation is one of those big complex global issues and it’s not something that’s going to be solved by pointing the finger at food retailers.”

Stanford disagrees.

“Supermarkets are very profitable. This is not an improvised operation,” he said, adding that profits had doubled since the start of the panic.

“They took advantage of the unique circumstances of the pandemic to fatten their margins. Part of the reason is the desperation people felt when you couldn’t get enough toilet paper or other basics. »

But he and Tombe agreed that the grocery industry was receiving disproportionate attention and scrutiny, amid soaring profits from energy companies.

“There is a symbolic visibility at the grocery store because we go there very often. And we should point fingers at other places that are even worse,” Stanford said. “But that doesn’t mean we shouldn’t look at supermarkets.”


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