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Business Environment Profiles - Canada

Consumer price index for food

Published: 31 January 2025

Key Metrics

Consumer price index for food

Total (2025)

193 Index

Annualized Growth 2020-25

4.6 %

Definition of Consumer price index for food

This index represents the consumer price index for food in Canada, excluding the effect of indirect taxes. The index does include non-alcoholic beverages. The index has a base year of 2002 and is sourced from Statistics Canada.

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Recent Trends – Consumer price index for food

Excluding a small dip in 1992, the consumer price index (CPI) for food has grown steadily every year since at least 1981, typically between 1.5% and 5.0% annually. Moreover, this trend continued throughout the five-year period, despite the global financial crisis. From 2015 to 2020, food prices have increased at a faster rate than the overall consumer price index almost every year. Similarly, according to Statistics Canada, food prices rose at nearly twice the rate of the broader consumer price index (excluding food) from 2007 to 2012.

According to Oxfam Canada, there are a variety of factors explaining this moderate growth in domestic food prices. As farming and the transportation of goods require a substantial amount of fuel, rising oil prices increased production costs, which were passed on to consumers. Additionally, the use of crops for biofuel decreased the amount of product used for consumption. According to Oxfam Canada, 40.0% of the corn crop in the United States, and a similar portion in Canada, is used for biofuel, decreasing supply and increasing prices. Additionally, the vast geographical area and population density of the country pose distribution issues. Local processing facilities may be located far from supplies or consumers, raising transportation costs. Also, farmers experience relatively higher investment costs for equipment or seeds produced in the United States due to the weak Canadian dollar. Moreover, the depreciation of the loonie during the period has placed upward pressure on food prices. First, a weaker currency turns food imports more expensive, driving up prices of most imported foods. Second, a weaker currency foments exports of food products, which in turn drives down domestic supply, which can also add pressure to food prices. In 2015, for example, the steep depreciation of the loonie overshadowed lower fuel prices and drove food prices up at the highest rate in the period.

Food prices rose significantly in 2020 primarily due to the effects of the pandemic, increasing a 2.3% over the year. Low oil prices depressed the value of the Canadian dollar, making it more expensive for stores to purchase goods from outside the country. In addition, supply chain pressures, bottlenecks and shifting patterns of consumer demand increased costs for retailers, who struggled to keep up with demand. Stores also incurred costs related to employee safety, such as installing plexiglass barriers and instituting stringent cleaning protocols, as well as paying higher wages. All things considered, at least a portion of these costs were passed on to consumers in the form of higher food prices. Inflation pressure persisted into 2021, with food prices rising another 2.5%. Continued supply chain bottle necks and increasing transportation prices amplified inflation pressure in many consumer goods and commodities. This inflation also trickled into wages, implying a more structural shift upward in consumer prices in the near-term.

In 2022, food prices soared as surging inflation combined with the war in Ukraine led to prices rising 8.9% during the year. The New York Times also notes that labor shortages, gas prices, lingering supply chain inefficiencies as well as the effects of the Western Canadian drought in 2021 additionally affected prices during the year. Despite the Bank of Canada aggressively combating inflation by raising the overnight interest rate during 2022, inflation still remained above target levels during 2023. According to Canada's 2023 Food Price Report, vegetables, dairy and meat prices, in particular, experienced larger hikes during the year. A weakening Canadian dollar, compared with the US dollar, and the uncertainty surrounding the Ukraine war and additional global conflicts has continued to drive costs up. According to Dr. Stuart Smyth, University of Saskatchewan campus lead, significant labor shortages in important sectors, such as food processing, crop harvesting and transportation have limited supply. After rising 7.5% during 2023, food price increases are expected to slightly decelerate in 2024, as inflation falls. However, the consumer price index for food in Canada will still ultimately rise at an annualized rate of 4.6% over the five years to 2025.

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5-Year Outlook – Consumer price index for food

Over the five years to 2030, domestic food prices are anticipated to climb at an annualized rate ...

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