TORONTO – Some shelves at an otherwise well stocked grocery store in one of the country’s poorer postal codes are showing some subtle gaps.
Familiar items such as rice and bags of flour are disappearing quickly as shoppers, already struggling to make ends meet, stock up on basics in anticipation of the rising prices economists predict are around the corner.
“It’s like seeing people from another time,” said Connie Harrison, a social assistance recipient who lives in the city’s St. James Town neighbourhood.
“It’s about food. It’s about the basics of life. You get very scared. We’ve never experienced this.”
So far, Canada has been largely insulated from soaring food prices.
A stronger dollar made imported fruit and vegetables cheaper over the winter. Supermarkets waged retail price wars that depressed prices. Overall inflation has been low.
All that appears set to change.
Higher food demand in the developing world, crop-land diversion to ethanol production, poor harvests that have depleted grain reserves, and energy costs on a firm upward track are conspiring to boost grocery bills.
“It’s almost a perfect storm,” said Avery Shenfeld, senior economist at CIBC World Markets.
“There are multiple factors all pushing in the direction of higher food prices at the same time.”
Shenfeld is predicting food-price inflation will rise to 3.5 per cent by the middle of 2009, enough to add half a percentage point to the overall consumer price index.
“By this time next year, we’ll certainly see higher food inflation than we’re seeing now,” said Shenfeld. “For those who are not getting substantial wage increases, it’s a rise in the cost of living.”
Flour and bakery products prices have already risen. The latest Statistics Canada data show the price of pasta has risen 26 per cent in the past year. Bread is up 9.9 per cent and flour is up 8.3 per cent at the grocery stores.
A year ago, Harrison said, the cheapest white bread she could buy was $1.19. Now it sells for $1.99. As a result, she’s cut back on bread. Her pasta portions are also smaller.
About 720,000 Canadians, 39 per cent of them children, now use food banks every month, an 8.5 per cent increase over the past decade.
Katharine Schmidt, executive director of the Canadian Association of Food Banks, says higher prices have not yet had a huge impact but the forecasts are worrisome.
“We’re watching this one very closely,” Schmidt said.
“If prices of food rise significantly enough, we’re concerned about families who are already stretched, and how that might affect their inability to be able to afford their own food.”
Higher gasoline prices have pushed up transportation costs and are having an impact on food-bank budgets, she said.
Potentially compounding the problem is the possibility interest rates will rise in the coming year, adding further pressure on those with variable-rate mortgages or reliant on other forms of increasingly expensive forms of credit.
Social activists say those people already feeling the squeeze – seniors on fixed incomes, social-assistance recipients, minimum-wage earners – are increasingly fearful of the future.
“A lot of hoarding is starting because people are afraid that their basics are going to go up in price,” said Michael Creek, a director with the National Anti-Poverty Organization.
“They’re afraid that they’re not going to be able to afford it in a couple of a months time.”
Provincial governments say they have general assistance programs in place, although not specifically for food. Alberta, for example, offers help for those who can’t pay their utilities.
Ontario has raised its general social assistance rates by two per cent this year.
Still, those who help low-income Canadians feed themselves worry they could soon find themselves overwhelmed by the disadvantaged hungry if food prices rise substantially.
“It’s really troubling because we don’t hear anybody who are leaders in government starting to make plans for people who are living in poverty if prices do really spike,” said Creek.
“We’re going to have a lot of people in a lot of trouble if we don’t start making contingency plans for if and when that happens.”
