Here’s something to chew on over your morning bowl of cereal: Only 2 per cent of the price is the cost of the grain.
The rest goes to pay for shipping, processing, packaging and advertising, along with heating and lighting the store where it is sold, a Statistics Canada report says.
That’s one of the reasons food price inflation remains relatively low in Canada, at 1.2 per cent over the 12 months, even as the price of grain soars on world markets, the study concludes.
It’s not the only reason Canada has the second lowest food price inflation in the world, after Japan, says the StatsCan study, called Food Prices: A boon for producers, a buffer for consumers.
A rising dollar has made imports, like fruits and vegetables, cheaper, offsetting higher prices for things like bread and pasta. Canada’s supply management system, which limits imports of poultry, eggs and milk, keep prices for those goods relatively stable.
And the entry of Wal-Mart Canada into the fresh food market has sparked a price war among food retailers, pushing prices on store shelves below cost in some instances.