Column: Rising prices offer food for thought in the new year

With all the other financial and political pressures, predictions are that food costs could spike higher than they did in 2015.

No one needs to be told that food prices are rising. But this year, with all the other financial and political pressures, predictions are that food costs could spike higher than they did in 2015.

In their Food Price Report 2016 published by the Food Institute of the University of Guelph, the prediction is that food prices could increase anywhere from two per cent to as much as four per cent. In 2014 the prediction was that overall food prices in 2015 would rise by up to three per cent. Back then, the Canadian dollar was a lot stronger (around 85 cents) against the American dollar and food inflation was pretty much on par with expectations. But the more the Canadian dollar lost traction all those vulnerable imported foods (fruits, nuts, vegetables, processed and grocery products) increased.

In fact, the report said that for every one cent drop in the dollar over a short period of time, currency-exposed food categories like vegetables, fruits and nuts (all those imported) are likely to increase in cost by more than 1 per cent.

When all was factored in, food prices in 2015 rose by 4.1 per cent across the country which translated to an average Canadian household paying some $325 more for food last year. And this year isn’t looking any better with forecasts expecting consumers to be paying $345 more for food.  Fruits and vegetables (81 per cent of which are imported across Canada) are expected to increase 4.5 per cent alone. Last year, just finding sourcing food crops in the south was demanding given the widespread drought.

Meat prices rose 5 per cent last year and could go up another 4.5 per cent this year, driving some consumers to search for protein alternatives such as fish products and pulses (lentils, chickpeas). Who knew 2016 is the UN International Year of Pulses?

The report stated that, of the people surveyed, 62.1 per cent said that financial reasons were the drivers for cutting back on beef consumption. Meanwhile, fish and seafood rose just 2.4 per cent and could increase three per cent this year. Grains were up (bread and bakeries rose 2.9 per cent) while the report stated that pasta (10.2 per cent), crackers (4 per cent), cookies (3.8 per cent) and rice (3 per cent) all added to inflation. The good news was that dairy products remained stable.

But what’s driving the increases?

The falling dollar is a huge influence and it’s been in free-fall for the past 18 months. On Wednesday, it was under 71 cents, a place it hasn’t been since 2003. And it’s moving toward that psychological floorboard level of 70 cents.

Financial and political wonks are worried. There are a bunch of things that could go sideways this year. Just last month there were rumblings of $20 oil, a New York banker’s Goldman Sachs prediction. Saudi Arabia is continuing to pump out cheap oil while keeping up its grunt with Iran. China’s in slowdown, meaning a shrinking economy could translate into less imports from Canada.  North Korea’s H-bomb bluster has heightened tensions. The U.S. is in an upswing but it’s also a presidential election year so what gets done, when, and by whom may put the brakes on continued growth. Economic wobbles and cheap oil will keep the loonie down.

As world-worries domino their way through the grocery stores, one outside influence may actually be helpful. El Nino. California has been getting some heavy rain this week which could stabilize drought-starved fields and allow farmers to increase production.

There’s no doubt that all this underscores the importance of supporting and expanding local food production to offset that dreaded grocery bill.