Canada has a policy-driven food inflation problem
By Lethbridge Herald on January 28, 2026.
Sylvain Charlebois
TROY MEDIA
Food prices in Canada are rising faster than in any other G7 country, and the reason is no longer a mystery: domestic policy failure is driving food inflation, not global shocks or corporate greed.
In December alone, food prices rose 6.2 per cent year-over-year, with grocery costs up five per cent and restaurant prices jumping 8.5 per cent.
That alone would be troubling. What makes it more alarming is that inflation came in well above expectations, pushing Canada to its highest food inflation rate since August 2023.
According to the latest internationally comparable data, Canada now sits at the top of the G7 for food inflation. The numbers speak for themselves: Canada at 6.2 per cent, Japan close behind at 6.1 per cent, followed by the U.K. at 4.2 per cent and the U.S. at just 3.1 per cent. Italy, France and Germany are all hovering below three per cent. This should stop policymakers in Canada in their tracks.
It makes little sense that food inflation in Canada is roughly double that of the United States, especially given that Washington has embraced tariffs and trade confrontation far more aggressively than Ottawa. If tariffs were the main driver, the U.S. should be leading this unfortunate ranking. It isn’t.
Part of December’s spike can be explained by the GST holiday, which applied for 17 days of the month. Temporary tax relief often feels good in the moment, but it comes with a cost: pricing volatility. When taxes are suspended and then reintroduced, price signals become distorted. Retailers and suppliers adjust, sometimes conservatively, sometimes opportunistically. Only now can we properly measure those effects, and the results are not encouraging.
At the grocery level, December’s inflation was driven primarily by meat, fish, vegetables and pantry staples such as coffee. This occurred during the second month of the so-called “blackout period”, an industry practice in which large retailers ask suppliers to refrain from raising prices late in the year, typically during peak holiday demand.
That prices rose anyway tells us something important: cost pressures are real, persistent and increasingly difficult to contain.
And the outlook is worse. January 2026 food inflation is very likely to come in even higher. That should deeply concern anyone who cares about household affordability, food security or economic competitiveness.
Yes, some of Canada’s food inflation still reflects global factors, including climate volatility, energy costs and supply disruptions. But most of it is now policy-induced.
Regulatory drag, interprovincial trade barriers, poor logistics, rising compliance costs, carbon pricing embedded throughout the supply chain and a sluggish macroeconomic environment all compound one another. These are not temporary shocks. They are structural weaknesses. This is occurring even as Canada’s overall inflation rate has eased from the post-pandemic highs seen in 2022 and 2023, making food an outlier among major consumer categories.
The first step in solving a problem is acknowledging that it exists.
This is not about blaming one grocer or one executive. If food inflation were driven by profiteering, we would see it clearly in financial statements, in sustained increases in gross margins. Bay Street analysts and accountants would have flagged it long ago. They haven’t, because the data don’t support that narrative.
That said, grocers are not entirely blameless. The fact that prices climbed during a blackout period raises legitimate questions about transparency, bargaining dynamics and how costs are passed through the system. Retailers are not “as white as snow” here, and scrutiny is warranted. But scapegoating them distracts from the real issue.
Canada has a policy-driven food inflation problem, and until we are willing to say that out loud, nothing meaningful will change. Temporary tax holidays, populist rhetoric and finger-pointing may win headlines, but they will not bring prices down.
Food inflation is no longer a passing storm. It is a warning signal, and ignoring it carries consequences for household budgets, food security and Canada’s long-term economic competitiveness.
Dr. Sylvain Charlebois is a Canadian professor and researcher in food distribution and policy. He is senior director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast. He is frequently cited in the media for his insights on food prices, agricultural trends, and the global food supply chain.
20-19
Weak. Only one statement regarding policy, and an insubstantial one: “Regulatory drag, interprovincial trade barriers, poor logistics, rising compliance costs, carbon pricing embedded throughout the supply chain and a sluggish macroeconomic environment all compound one another.”
What regulations? What compliance costs? Health and safety?
Is the government responsible for logistics?
Macroeconomic environment, that the letter writer previously said wasn’t a factor?
It sounds to me that this letter is a typical corporate-welfare argument against protecting the worker and the environment – socialize the costs and pocket the profits. Blame the government.