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‘It is simply not true’ — Grocery CEOs push back at price-gouging allegations

The heads of Canada's biggest grocery chains are set to appear at a parliamentary committee in Ottawa today to answer a question that has been vexing Canadians for months: Why are grocery prices going up at their fastest pace in decades?

Heads of Loblaw, Metro and Empire foods set to appear in parliamentary committee probing food inflation

Loblaws CEO Galen Weston is shown smiling at the company's annual general meeting in 2019.

The heads of Canada's biggest grocery chains are set to appear at a parliamentary committee in Ottawa today to answer a question that has been vexing Canadians for months: Why are grocery prices going up at their fastest pace in decades?

The CEOs of Metro, Empire Foods and Loblaw have been summoned to testify at the Standing Committee on Agriculture and Agri-Food this afternoon, to face parliamentarians from all parties seeking answers to the question above and others.

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After plunging along with everything else in the early days of the pandemic, food prices started to escalate quickly starting in late 2021, and are currently increasing at their fastest annual pace in decades.

Official data from Statistics Canada shows that the price of food purchased at stores went up by more than 11 per cent in the year up to January, even as the overall inflation rate slowed to 5.9 per cent.

'Greedflation' alleged

Many factors have been blamed for the increase, from frail supply chains, to sharply higher prices for commodities like wheat and oil, largely brought about by Russia's invasion of Ukraine in early 2022.

But as the impact of those factors has ebbed, the major food companies have found themselves under increased scrutiny as their profits have skyrocketed. Collectively, the three aforementioned food giants took in more than $2 billion in profit in their most recently completed fiscal year.

WATCH | Why Ottawa is probing what's going on with your grocery bill:

Grocery store CEOs are about to get grilled | About That

1 day ago

Duration 16:16

Food prices in Canada are skyrocketing — and grocery store CEOs have been called to Parliament to explain soaring profits. We go grocery shopping to find out which foods are costing you more at the checkout aisle.

But executives at those chains say accusations of profiteering are unfounded, and claim that while their overall sales are indeed higher, their profit margins — or the amount they make on every purchase — are about where they have always been, in the low single digits.

Wednesday's committee hearing will be a chance for members of parliament to question the executives directly on the veracity of those claims.

Earlier this week, the committee heard from food suppliers, who say their costs are being squeezed to the point where they have no choice but to pass those on.

"Canada's processors are getting squeezed from both sides and it's not sustainable," said James Donaldson, the CEO of B.C. Food & Beverage, an industry group that represents food suppliers in the province. "The average processor does not have the luxury of rejecting price increases … or to charge them fees and levies with no backup or prior notice."

That's a reference to a campaign that market leader Loblaw launched in the fall, promising to freeze the price of thousands of items under its in-house No Name brand through the holiday season — a move that many consumers and marketing experts dismissed as a publicity stunt.

'Really hard right now for food processors'

J. P. Gervais, an economist with Farm Credit Canada who studies all the links in Canada's food supply chain, says that food suppliers have seen their costs skyrocket this year, but they haven't been able to fully pass those increases on to the grocery chains they sell to.

"It's really hard right now for food processors to pass on some of the higher costs," he told CBC News in an interview. "We've seen in 2022, the profit margins of food producers and food processors actually come down relative to 2021."

Today's testimony is slated to begin at 4:30 p.m. ET with Michael Medline, president and CEO of Empire Company, which owns Sobey's, FreshCo, Farm Boy, Foodland and other chains.

He'll be followed by Galen Weston, the head of Loblaw, which owns No Frills, Zehrs, Valu-Mart, Provigo, and its eponymous namesake grocery brand.

Last on the list will be Eric La Flèche, president and CEO of Metro, which owns Food Basics and other chains.

After their opening statements, the three CEOs will answer questions from parliamentarians for about two hours.

Credit belongs to : www.cbc.ca

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