Get ready for sticker shock – it’s about to get a lot more expensive at the grocery store. The Canadian dollar continues to tumble, falling to $0.69 – its lowest since 1971 – last week. Nicknamed the “Petro-dollar,” the sinking loonie has a lot to do with the falling price of oil. And the pain isn’t just limited to the energy sector, as the effects are now being felt in other parts of the economy – including the supermarket.
Supermarket Sticker Shock
Canadians are being hit with a double-whammy as tough agricultural times and the plummeting loonie lead to higher prices – and unfortunately, there’s no relief in sight. The average household in Canada spent an extra $325 on food in 2015 and expects to spend an extra $345 in 2016, according to the University of Guelph’s Food Institute.
Grocery store staples meat and produce are expected to see the biggest price jump. Meat prices, which were already up 5 per cent last year, are expecting a 4.5 per cent increase this year. Fruits and vegetables are expected to see a similar increase in price, rising between 4 and 4.5 per cent in 2016.
Why Are Food Prices Rising?
Much of the price increase can be attributed to the lagging loonie. Due to our colder climate, Canada imports 81 per cent of our fruits and vegetables. Other foods expecting price increases include fish and seafood (3 per cent price increase) and dairy, eggs and grains (2 per cent price increase).
And, while milder weather due to El Nino may aid in California droughts and boost American agricultural output, Canada’s low dollar means we won’t see any relief in supermarkets north of the border.
Grocery stores also have investors to contend with. Tough category competition and razor thin profits mean grocers are struggling to balance competitiveness in the market with staying profitable. This means much of their cost increases are passed down in the form of higher food prices.s.
My Top 4 Tips for Grocery Savings
For most families, their most costly household budget items after mortgage/rent are transportation and food. One of the ways I was able to pay off my mortgage in only three years was by spending $100 a month on groceries. While that’s probably not realistic for most families, there are simple ways you can save:
1. Throw Away Less: That moldy bread in your pantry and those rotting tomatoes in your fridge are costing you money. Spoiling food adds up. The average household wastes about $1,500 worth of food a year, according to a report by Provision Coalition (that’s even more than I spend on food in a whole year!). Pay attention to the best before date when you’re buying perishable goods and take a look at what you already have in the fridge before heading to the supermarket.
2. Buy in Season: If you’re looking for sticker shock, try buying cherries in winter. Yikes! Consider adjusting your eating habits based on seasons. Not only will you add more variety to your diet, you’ll keep more money in your wallet. If you’re not willing to give up your favourite produce, consider buying canned or frozen fruit instead.
Also read: The Best Things to Buy in January>
3. Make a Shopping List: Not only does a shopping list save time, it saves money. When you have a shopping list, you know exactly what you’re going to buy when heading into the supermarkets. This helps reduce impulse purchases like candy, chips and pop. Making a shopping list is a lot like tracking your spending – it helps keep your budget on track.
4. Fine Tune Your Rewards: It may be small consolation, but higher prices mean more rewards earned on your grocery purchases. Ensure you’re amping up your earnings at the till with a grocery rewards credit card, or a cash back option with a high-earning grocery category. Rewards can be an effective way to offset your regular food budget – just make sure you pay off your purchases right away, and avoid carrying a balance.
Click here for the best rewards credit cards in Canada>