Grocery wars: How inflation is impacting options at the grocery store

If you’re looking for a bag of Lays chips, chances are you won’t find them at a Loblaw grocery store.

This is the latest example of how inflation is impacting the food industry, and now the Retail Council of Canada (RCC) says it has received a large number of calls from grocery retailers noting what they’re describing as a flood of price increases.

In an email statement to CityNews, it said “RCC has received an unprecedented number of calls from small, mid and large grocery retailers across the country noting a flood of price increases in January from vendors, many of whom are large global companies.”

“This follows an already alarming number of increases in the preceding quarter (2021). In many cases the increases are unprecedented and far exceed typical food inflation levels. Grocers continue to do everything in their power to ensure that Canadians have access to food, choice and competitive pricing,” the statement read.

At issue is a dispute over pricing between Frito-Lay Canada and Loblaw Companies Ltd. as the maker of brands like Cheetos, Doritos, Lays, Ruffles and Sunchips tries to recoup higher costs.

The situation has left the chip and snack food aisle of many Loblaw stores less full than usual.

The friction is one example of how vendors are charging retailers more to carry their items. However, experts suggest this could be a sign of tension in Canada’s food industry, which some say could get much worse as supply chain issues continue.

“I wouldn’t be surprised to see other companies do the same thing affecting other parts of the grocery store,” said Sylvain Charlebois, the director of Agri-food Analytics Lab at Dalhousie University. “And perhaps healthier parts of the grocery store, like dairy for example, and a stop sell in dairy would be disastrous because you could see dairy farmers actually dump milk all over the place as a result.”

According to a Statistics Canada report released last week, the price of food at grocery stores went up by 6.5 per cent in January 2022 — which is an increase the country hasn’t seen since 2009.

If consumers see more price showdowns, such as with Frito-Lay and Loblaw, the question remains: who should be absorbing the costs?

“Honestly there’s a new normal out there. I think it’s important for people to realize that it’s been difficult,” said Charlebois, “Prices are actually rising and they won’t drop anytime soon. We’ve been spoiled as consumers for really the last several decades. But things are shifting rapidly right now. And I do believe Canadian families will be expected to pay more for food moving forward unfortunately.”

Charlebois says what could help level out pricing before it gets worse is the implementation of a code of practice by the federal government that could then offer an arbitrator to settle these types of disputes.