Food prices poised to take biggest jump in a decade, report finds

Get ready to shell out more money for groceries in 2021 a lot more.

The latest edition of the Canada Food Price Report is out, and it's forecasting the biggest price spike in a decade.

Dalhousie professor and lead report authorSylvainCharleboissays it's "not news" to anybody who buys groceries that prices are on the rise.

"It's the rate that they're going up three to five per cent so for a family of four with two teenagers, your food bill will likely go up by $695 for 2021," Charleboissaid. "That's the highest we've forecast in the last decade."

The other bad news, Charlebois said, is that the report's accuracy rate has proven to be pretty spot-on.

"Every year we go back and see how we did, and every year we are accurate between 75 and 90 per cent of the time."

Pandemic is a factor, but not 'the' factor

Charlebois said the pandemic is a factor in the price spike, but it's not "the" factor.

Climate change has had a significant influence, with devastating events like the California wildfires wreaking havoc in the produce aisle. Distribution costs are another factor, he said, noting Canada is a "difficult market to service."

But the pandemic has had an undeniable effect on what we eat, how we buy groceries, and even where our food comes from.

We are more aware of what we're buying. More focused, more disciplined. And that's why we're not seeing the panic-buying we saw in spring.- Sylvain Charlebois, Canada Food Price Report lead author

Before the pandemic, food service meaning restaurants accounted for 36 per cent of our food bill.

"All of a sudden, that has become secondary," Charlebois said. "Nobody was going to restaurants for quite some time. So we excluded food service altogether from our predictions and basically just looked at retail food prices."

And as prices continue to rise and a recession sets in, consumers will begin to "trade down," he said.

Shoppers will be looking for cheaper options, such as private or store-brand labels such asSuperstore's President's Choice or Sobeys' Compliments brands.

"We're expecting to see way more of those," Charlebois said.

He noted that "trading down" in this case might actually be more of a lateral move in terms of the quality you're getting.

"I won't say which brands," he said, "but sometimes it is the same product, but at a cheaper price."

Consumers' relationship with food has changed

Another effect of the pandemic has been a change in shopping behaviours and in our relationshipwith food.

"We are more aware of what we're buying, more focused, more disciplined," Charlebois said. "And that's why we're not seeing the panic-buying we saw in spring.

"The consumer has a very different mindset now. We just needed a pandemic to make us waste less and become better inventory managers."

But will that sharpened focus and discipline remain when the vaccine has arrived and the pandemic fades to a mercifully distant memory?

Charlebois isn't sure.

"I don't know," he said.

For the past nine months, people have beendriven by fear. Nine months is "long enough to create habits," he said, but the vaccine is bringing hope, and it will likely change how people behave.

One trend he definitely sees sticking around, however, is online buying.

Shoppers turned to online grocery shopping in waves when the pandemic hit, and grocers appear to be banking on that trend becoming a permanent habit.

Charlebois said the industry is investing $12 billion over the next five years, making sure their interfaces are usable, betting that the convenience, and fear of virus, will keep people shopping online.

Atlantic Canadians may be among the most likely to make that bet pay off.

"In Atlantic Canada, we have the highest rate of consumers wanting to buy food online because of fear of virus, and we were in the Atlanticbubble for a long time," Charlebois said.

"Fear is irrational, but it will influence behaviour. The change is here to stay."