By CBC News, cbc.ca, Updated: December 6, 2012 10:56 AM
Researchers with a good track record of predicting price hikes say Canadians should expect the price of meat to increase by as much as 10 per cent next year.
In their annual forecast, researchers at the University of Guelph say they expect retail prices for beef and pork to increase by much more than any other food group, which for the most part will edge up modestly along with the overall inflation rate.
Last year, the school said it expected the overall price of food in Canada to go up by less than two per cent, and that's pretty much what happened. Overall food prices rose by only one per cent in 2012, data shows. That's because large increases in the price of meat and eggs were offset by large declines in prices for fresh vegetables.
"Food prices overall decreased as the looming entrance of Target caused retailers like Wal-Mart to keep prices low for consumers," the report says.
For next year, the school is expecting food prices to increase at a rate just slightly ahead of inflation, somewhere between 1.5 and 3.5 per cent.
"We would expect that food prices will go up over the next year," Professor Mike von Massow said in an interview. "Not insignificant but not the horrible news that we've heard that it might be."
Within that group, meat and eggs could be in for bigger price hikes. Cattle feed prices spiked in 2012, and that caused ranchers to slaughter their herds earlier so they don't have to spend as much on feeding them.
That created a supply glut for beef that temporarily held down retail prices, but that won't last, the school says. "Because the inventories are now much lower than last year, pressures on beef production and distribution [will impact] the price for consumers," the report says. Beef prices could be set to increase by between six and eight per cent next year.
Pork prices could be set to increase as much as eight to 10 per cent this year because of similar supply issues. "The pork market over the past few years has been moderated and depressed for consumers, inferring it will respond in a larger increase than what we have seen," the report reads.
One of the biggest factors affecting food prices this year was the massive drought that devastated much of the U.S. Midwest through the summer. "A lot of the impacts on meats were delayed," von Massow said. "So we saw higher grain prices, which are getting fed now to cattle."
"Fill the freezer now, because it's going to get tougher I think going forward," he adds.
Dairy, bread to increase
Indeed, some shoppers already say prices will be a factor in their purchasing decisions at the grocery store
"If the meat price goes up, we adjust our eating habits," said Adrian Soegandi, a shopper at Fiesta Farms grocery store in Toronto on Tuesday. Janet Hudson, another shopper, said that at a certain point, "You don't want to pay for it, so you don't."
Beyond animal feed, bread and grain prices themselves are expected to increase by between two and four per cent, largely because of consumer preferences away from traditional flour and towards gluten-free and whole-wheat options.
Dairy prices are set to rise by between one and three per cent mainly because our palates are getting more discriminating. "Canadian consumers are growing away from sodium slabs and more towards higher quality cheeses," the school says.
Dairy and bakery products could likely remain cheaper than they would otherwise be, because they're loss leaders for grocery stores — products they sell at a small or negative margin as an enticement to get you into the store to buy other things.
And due to increased scrutiny on animal welfare, egg prices could be as much as five per cent higher, the school predicts.
The report also forecasts that food bank usage will hit a record high next year, especially if price hikes for meat come to pass.
"And 2013 may see even more wasted food than before," the report says. "Canadian households are wasting 38 per cent of products purchased in store. Restaurants are not doing that much better, with nearly half of all food purchased going to waste."