Canadian food suppliers are again issuing advisories to food retailers, notifying them of upcoming price increases.

The letters signal that more price increases will hit grocery stores this fall in a year that has already seen near double-digit increases in the cost of food.

In some cases, the higher prices are due to the Canadian Dairy Commission’s approval of a second milk price increase this year. Farm gate milk prices are expected to increase by about two cents per litre, or 2.5%, on September 1.

Yet dairy processors also appear to be tackling their own increases – the so-called encroachment of price increases that industry watchers have predicted will happen.

Lactalis Canada, for example, said in a letter to customers that it was to implement an average national market increase of 5% in September, a rate it said takes into account the CDC price increase, as well as “significant inflationary costs” of the business. is confronted.

Arla Foods Canada issued a similar notice, saying price increases for its products coming in September would reflect rising dairy ingredient costs and “inflationary impacts on freight and packaging.”

Saputo Dairy Products Canada also said it would apply price increases of around 5%, depending on the category.

“Producers have had to deal with increased production costs, as well as rising feed, energy and fertilizer costs, which have had a significant impact on the milk price adjustment to this year’s farm,” Saputo said in a letter to its retail customers.

“In addition to these regulated increases, there have been unprecedented and sustained inflationary pressures affecting manufacturing, energy, labor and distribution costs throughout the supply chain.”

The price increases shared with grocers underscore how regulated dairy price increases are compounded by additional price increases throughout the supply chain, said Gary Sands, senior vice president of public policy. of the Canadian Federation of Independent Grocers.

“The schedule of increases almost seems to be on top of the regulated increases,” he said. “The net effect is to further exacerbate the problem and concerns about affordability.”

These concerns are particularly acute in rural and remote communities, where transportation and fuel surcharges are higher, Sands said. “Rising prices for these essentials are of particular concern in these communities.”

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Following rising farm-to-store food costs

Rising spending along the supply chain and even the weather are some of the factors behind the rising food prices Canadians are seeing at the grocery store.

The price of food purchased from stores rose 9.7% in May from a year ago, as the cost of almost everything in the grocery cart rose, Statistics Canada said last month.

Sylvain Charlebois, professor of food distribution and policy at Dalhousie University, said the pace of food price increases could reach 10% before starting to slow.

“We expect food inflation to peak by the end of September,” he said. “It could actually go north of 10% before things start to calm down.”

The U.S. Bureau of Labor Statistics said Wednesday that the inflation rate for food eaten in that country hit 10.4% in June, the biggest 12-month increase since 1981.

Charlebois said Statistics Canada is expected to release similar numbers on food inflation when it releases the consumer price index for June next week.

The price spike will prompt grocers to promote their private label options, also known as the retailer’s house brand, he said.

“Consumers are side-trading or bargaining on anything and everything right now and are turning to discount stores,” Charlebois said. “They are definitely more sensitive to the cost of living.”

Meanwhile, letters sent by suppliers to retailers outlining the reasoning behind the cost increases are part of an effort not to be accused of “greed”, he said.

“The last thing processors want is to become a scapegoat and be blamed for rising food inflation,” Charlebois said.

“Inflation impacts all Canadians, but it also impacts the political economy of food and how the food industry is perceived.”

Lactalis said in its letter to customers that it is “very aware of the impact of inflation on consumers”.

“As we all know, this cycle of inflation is largely driven by the latest phase of the evolution of the pandemic and by the global geopolitical situation triggered by Russia’s invasion of Ukraine and the conflict in course,” the company said.