The Cost of Food in Canada
Walk into any grocery store in Canada today, and you’ll hear the same conversation in the checkout line—why is everything so expensive? A carton of eggs costs more than a year ago, fresh produce prices continue to climb, and even staple pantry items feel like a luxury. While grocery executives point to inflation and supply chain issues as the culprits, these explanations ring hollow when the country’s largest supermarket chains post record-breaking profits. In response to public outrage, the federal government has rolled out policies aimed at curbing costs, including the Grocery Code of Conduct to Bill C-56. However, as grocery bills continue to rise, many Canadians are left wondering—are these policies making a difference, or is the system too rigged in favor of corporate giants to change?
The Market Power of Grocery Giants
Canada’s grocery sector is one of the most concentrated in the world, with Loblaws, Metro, and Sobeys controlling nearly 60% of the market with Walmart and Costco taking up much of the remaining share. This corporate concentration has granted these chains immense pricing power, allowing them to dictate costs for suppliers and consumers. The Competition Bureau of Canada released a in 2023 report warning that lack of competition has led to artificially high prices, further exacerbated by supply chain constraints and inflationary pressures. While grocery executives often cite global shipping disruptions and higher operational costs as the reasons for increasing prices, many economic analysts argue that price gouging is a significant factor. Economist Isabella Weber describes this phenomenon as “seller’s inflation,” where companies in concentrated industries compete not on delivering the best prices, but on maximizing returns for shareholders. Her research suggests that even in competitive markets, corporations replicate price hikes to avoid missing out on opportunities to increase profits.
Economist Isabella Weber’s research reveals that in competitive markets, rivalling companies often
Canadian consumers are bracing for higher grocery bills as major grocers end their annual price freeze, a policy that temporarily halts price hikes from suppliers during the year’s final months.With its expiration, retailers are now "adjusting their prices to reflect accumulated cost increases from suppliers," leading to noticeable spikes at checkout. Adding further strain, new tariffs set to take effect in early 2025 will increase costs on imported goods, including key grocery staples. Dr. Sylvain Charlebois, a Canadian professor and researcher of food distribution and policy at Dalhousie University, warns that consumers will feel the impact almost immediately. Dr. Sylvain states that "If the tariffs are implemented as expected, grocery store prices could reflect these changes in about a week,".While some businesses may attempt to offset costs by adjusting supply chains or temporarily absorbing higher expenses, Charlebois notes that such measures are not sustainable long-term, making it likely that consumers will bear the brunt of rising prices.
Concerns over corporate profiteering have intensified in light of record-breaking revenues reported by major grocers. In 2024, Loblaws reported a 4.5% revenue increase despite widespread consumer frustration over rising food prices and a nationwide boycott movement against the chain. Following the report, the boycott was fueled by growing resentment over corporate greed, with many Canadians accusing Loblaws of keeping prices artificially high while taking in massive profits. While Loblaws executives claim that food inflation has eased, critics argue that the company prioritizes profit margins over affordability. This has fueled ongoing accusations that major grocers use inflation as a cover to raise prices unnecessarily rather than responding solely to increased operational costs.
The core issue remains the concentration of market power among a few dominant grocers. With major retailers dictating prices and absorbing cost fluctuations at their discretion, the lack of competition and corporate accountability remains the primary force behind persistently high grocery prices—one that government regulations have yet to address meaningfully.
Government Responses: Are They Effective?
Recognizing public frustration over rising grocery prices, the federal government has introduced a series of policies aimed at improving affordability and accountability within the sector. The Grocery Code of Conduct was created to regulate pricing practices and encourage fair competition, but concerns persist over its voluntary nature and whether major grocers will comply without stronger enforcement. Bill C-56 targets price-fixing and monopolistic practices, yet it does not regulate pricing directly, leaving large retailers to control how much consumers pay at checkout. Other proposed measures, such as tax breaks and price caps, have sparked debate over their potential impact, with questions remaining about whether they will lead to tangible relief for consumers. Despite these efforts, grocery prices remain high, and concerns remain over whether current policies can effectively address the root causes of rising costs.
Faced with growing consumer outrage over soaring grocery prices, the federal government has introduced policies to improve affordability and hold major grocers accountable. The Grocery Code of Conduct, developed as a voluntary agreement between industry stakeholders, was meant to promote fair trading practices and prevent larger retailers from abusing their dominance over suppliers. However, critics argue that the code lacks meaningful enforcement mechanisms, allowing major grocers to skirt its guidelines without facing significant consequences.
Industry expert Michael von Massow, a professor of food economics at the University of Guelph, has questioned the effectiveness of the code, arguing that without enforceable penalties, grocers can still exert power over suppliers with little oversight. He warns that the agreement relies too much on industry goodwill rather than regulatory action, which may result in grocers prioritizing their profit margins over fair consumer pricing. While the code aims to regulate these interactions, von Massow warns that it could unintentionally push prices higher if it restricts the ability of grocers to negotiate discounts from suppliers. "It's hard to see as an economist how taking money away from the big grocers will then also lead to lower prices," he writes. Some grocery chains have also delayed signing the agreement, raising further concerns about its effectiveness in fostering true market fairness.
In an effort to crack down on monopolistic behavior, the government also introduced Bill C-56, which amends the Competition Act to limit anti-competitive practices, prevent price-fixing, and grant the Competition Bureau more power to investigate dominant grocery chains. The bill also aims to eliminate restrictive property agreements that prevent new competitors from entering the market. While these amendments have been framed as pro-consumer reforms, some experts question whether they go far enough, noting that the bill does not impose direct price controls or force companies to justify price increases, meaning that grocers can continue charging high prices while operating within legal bounds. Aaron Wudrick of the Macdonald-Laurier Institute warns that rather than fostering competition, the bill could discourage new entrants and harm smaller grocers who lack the legal and financial resources to navigate more stringent regulations. This raises concerns that policy missteps could ultimately reinforce the dominance of large grocery chains rather than breaking their hold on the market.
Despite these interventions, grocery prices remain stubbornly high, fueling concerns that these policies are insufficient or too slow to take effect. Without breaking up monopolistic control, enhancing transparency, or introducing direct price relief, food prices are unlikely to decline in a meaningful way. As the next federal election approaches, food costs are set to remain a key political issue. Canadians will need to ask: Are these policies enough, or are they simply delaying real action on grocery affordability?