Fruit and vegetable prices hike overall food costs

Fruit and veggie lovershave seen theirpocketbooks pinched over this past yearas theprecious produce spiked in price,prompting anoverall increase in food costs.

"Well, obviouslythe weaklooniehas had an impact on produce and fruit prices," saidSylvain Charlebois, professor of marketing andconsumer studies attheUniversity of Guelph Food Institute. "They'vegoneupsignificanty."

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According to the Consumer Price Index, released by Statistics Canada on Friday,food prices increasedby four per cent in January 2016, compared to the same month a year earlier.Butfresh vegetables were up 18 per cent over that period, while the price of tomatoes aloneshot up 30 per cent from the previous month.

Lettuce was up nearly 18 per cent in January, compared to a year earlier, while other fresh vegetables,includingbroccoli, cauliflower, celery and peppers,registered their largest year-over-year increase since April 2009, rising 23 per cent over the previousyear.

Fresh fruit was up nearly 13 per cent for the year, with apples rising 16.6 per centandoranges 11.

'Driven by the weakened currency'

"Clearly many importers had to procure someproduce outside of North America and that really increases transportation costs," Charlebois said. "Pepperswe've had to go to Europe to get some of those products so that's why some products have increased by more than 30 per cent in a month."

"Weareimporting alot offruitsfromabroad," and the high prices arereallydrivenby theweakened currency,he said. "Ascontracts are renewed, we'regoingto see thatpercentagedrop over the nextlittlewhile. It willnotgain momentum."

Michel Sekimonyo,ananalyst at Statistics Canada, said a supply disruption caused by a lack of rain in California also affected the price ofimportedproduce.

"That has impacted the amount of availablevegetables in the market," he said.

Sekimonyoalso noted thatsome of those monthly increases, like the spike in the cost of tomatoes, can be attributed to the seasonal nature of the product.

Curiously, potatoes recordeda five per cent drop in price. But Sekimonyo said that may be related in part to last year's consumerscare,aftermetal objects werefound in some potatoes inNova Scotia and P.E.I.

However the price of spuds picked up in January, rising 2.6 per cent from December.

Meanwhile, the price of meats rose two per cent in January, compared to a year ago, with fresh and frozen beef increasingby four per cent.

Sekimonyo said there werelarge increases in meat pricesbetween January 2014 and January 2015, which were followed bya slowdown in 2015. Over the past three months, the price offresh and frozen beef has consistently fallen, he noted.

Increasedbeef production

"Higher priceshas motivated farmers to increase theirproductionof beef, that'swhat we'reseeing now," Sekimonyo said. We're "seeing an increaseof supply builtup between2014 to 2015 coming into the market."

Charlebois also noted that there has beensoftening of prices at the meat counter in both beef and chicken.

"Pork is still going up but we don't expect that to continue. Looking at hog futures, prices are likely toremainthe same or drop slightlyover the next few months," he said."The good news forbarbecueenthusiasts is we're not expecting beef prices to move up anytime soon.They couldactuallygo lower, but it's hard to tell how much."

The CPI also found that the cost of meals inrestaurants was up 2.5 per cent in January, compared tothe previousJanuary, but just up slightly from the month of December.

In December, aresearch team led byCharlebois published a studypredictingthat foundfood inflation rates will be two to four per cent in 2016.

The average Canadian household spends $8,631 on food, which means the average household could spend up to $345 more on food in 2016, the study found.

But Charleboissaid on Fridaythat these costs could be offset by the two per centrise in inflation, which would put pressure on both the private and public sector to raise wages.

"It means the margin between the food inflation and general inflation is shrinking," he said. " You may see other items go up in price and wages will go higher ... and actually give some breathing room to consumers to spend some money."

With energy costs muchlower than last year,there's likelybeen a lot of shifts in the family budget from energy to food, he said.

"If you own a car you'resaving about$1,000 on gas compared to last year. That's way more than how much more food is costingcompared to last year."