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Abating food inflation may not lead to food security gains

Reference: FCC

While Canada’s wealth and reputation for quality food products remains unparalleled, ranking second among the top countries in terms of quality of life, food affordability has declined in recent years. Factors such as inflation, adverse weather conditions, disruptions in global supply chains, increased input costs, and labour issues have largely contributed to this unfavourable development. This has led to rising food insecurity with surging prices of basic food commodities prompting households to make difficult choices. For the third year in a row, more than a fifth of the population is set to experience some form of food insecurity, evidenced by a projected decline in per capita real spending on food.

Current state of food insecurity in Canada

Statistics Canada defines food insecurity as the inability to have access to sufficient quantity of food largely due to financial constraints. Recent data from Statistics Canada estimated that in 2022, food insecurity affected 22.9% or 8.7 million Canadians, marking the highest rate since the inception of food insecurity data in 2018 (Figure 1). Since 2022, Canadians have experienced elevated levels of inflation in prices of food, housing, and other basic needs. Food inflation outpaced general inflation and income, resulting in a decline in food expenditures in real terms (i.e. adjusted for inflation) and consequently, an increase in food insecure households.

The reduction in real food spending is particularly noticeable on a per-capita basis, with 2022 registering the largest annual decline since 1961 (Figure 1). With per-capita real spending in Canadian households falling again last year, and expected to fall further this year, food insecurity is anticipated to remain high among Canadians. The moderation of food inflation should, however, provide some relief.

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