Feeling the pinch: Corporate "greedflation" is making Canadians poorer
If you’re still wondering why a trip to the grocery store or gas station is so expensive despite Canada’s cooling inflation rates, corporate “greedflation” might be to blame.
That’s according to a new report from Canadian financial platform Money.ca.
The website notes that “greedflation” happens when companies take advantage of inflation and raise prices “more than necessary.”
It adds that Canadians have seen a rise in the cost of living since the pandemic, as the country’s inflation rate peaked at 7.7% in 2022.
According to the latest Consumer Price Index (CPI) report, the inflation rate has since cooled to 2.67%, but prices on certain items remain high, and that’s being fueled by greedflation, says Money.ca.
The financial platform also references another study conducted by Groundwork Collaborative, a US-based non-profit think tank. This study reveals startling data on greedflation and its impact on American consumers.
That report found corporate profits accounted for a staggering 53% of inflation in the second and third quarters of 2023. The study added that during pre-pandemic times, profits had only driven 11% of price growth in the US.
Greedflation and food costs
PERO studio/Shutterstock
There are specific sectors where greedflation rears its ugly head, and the grocery industry is one of them, says Money.ca.
There certainly has been no shortage of shoppers expressing their frustrations towards grocery chains for outrageous prices.
The report points out that costs remain elevated despite an overall decline in food inflation in Canada. The country’s general food inflation rate peaked at 8.8% in 2022 and has since decreased.
The latest CPI data indicates that prices for food purchased from stores rose 1.5% in May, following a 1.4% increase in April.
“Although slight, this was the first acceleration since June 2023. Prices for groceries remain elevated and have increased by 22.5% compared with May 2020,” states the CPI report.
Money.ca says that increases in food prices during the pandemic were attributed to supply chain issues and labour force challenges, but Canada’s major grocers also “raised prices across the board,” leaving “consumers to foot the bill for increased shipping costs (not the precious profit margins).”
It also doesn’t help that Canada has a grocery industry monopoly, with big companies like Sobeys, Walmart, Costco, Metro, and Loblaw controlling 76% of the country’s grocery market share.
The report points to Canada’s Food Price Report, which projected that, despite cooling inflation, food prices in 2024 are still expected to increase by 2.5% to 4.5%, compared to 5% to 7% in 2023.
Additionally, a December 2023 report from the Centre for Future Work noted that while supermarket executives — such as Galen Weston Jr. of Loblaw Companies — have claimed that they haven’t profited from food price inflation, that isn’t quite the case.
That report cited industry-wide financial food retail data from Statistics Canada, which indicates that food retailers earn more than double the retail profits since prepandemic norms, and their earnings continue to grow.
The data also indicated that food retailers earned a whopping $4.6 billion up to October 2023 and were expected to exceed $6 billion in profits at the end of last year.
Still, one Canadian expert expressed his skepticism around these claims.
Speaking to Canada’s Parliamentary Committee on Agriculture earlier this year, Sylvain Charlebois — director of the agri-food analytics lab at Dalhousie University — said that “there is no substantiated evidence of profiteering within the food retail industry.”
You’re paying more for pretty much everything
According to Money.ca, Canadians are paying more for pretty much everything, not just food.
Money.ca
Take the cost of gas, for instance.
The report states that “Canadians are still paying above-inflation fuel prices.” Although gas prices declined by 2.8% in the first few months of 2024, they’re now increasing. April CPI data showed that gas prices rose 6.1% in that month, compared to 4.5% in March.
Money.ca also references Statistics Canada data, highlighting that “corporate profits in Canada remained high in 2023, despite economic growth stalling, unemployment rising and consumer demand stagnating.”
This was expanded on further by the Centre for Future Work in its February 2024 report on the matter.
Money.ca
“After-tax corporate profits across the financial and non-financial sectors of the economy totalled $577 billion for the year,” states the report, adding this shows how corporations “are continuing to profit from supply chain disruptions, high energy prices, and other pandemic after-shocks.”
Money.ca’s findings come at a time when Canadians are already battling expensive housing. According to a Leger report, housing affordability was the most important issue for Canadians in January, and this trend remained consistent in July. Before this, in the fall of 2023, inflation was Canadians’ biggest worry.
Corey Santos, the author of Money.ca’s report, says that there are some economists who “dismiss greedflation as a buzzword.”
“But what do you call it when official figures show declining inflation, prices still rise, corporate profits soar while the average Canadian’s savings dwindles?” he added.
Still, according to the Bank of Canada (BoC), corporations marking up prices did little to contribute to inflation.
While fighting corporate greed may seem like an uphill battle, Santos encourages Canadians to create a comprehensive budget that accounts for cost changes and says people should regularly review their spending.
“Financial education and smart budgeting techniques are the best defence against exploitation and the key to long-term financial security,” he stated.
“By learning and utilizing these best practices, Canadians can gain the knowledge and skills to navigate greedflation.”
Additionally, common-sense steps like paying down your existing credit balance, supporting businesses dedicated to fair pricing, and investing in a high-yield savings account can all help your pocketbook.
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