Supermarket CEOs warn of looming price increases

Three major supermarket CEOs in Canada have expressed their expectations of imminent price increases within their popular grocery stores.

Cost pressures have been barrelling down on many Canadian industries thanks to NAFTA uncertainty and trade negotiations. Further, minimum wages are going up in certain provinces while gas and shipping costs continue to strain bottom lines.

Price inflation is expected, according to chief executives at Metro Inc., Loblaw Companies Ltd. and Empire Co. (Sobeys) who spoke during a school conference in Toronto Tuesday.

Eric La Fleche, Metro CEO, said shoppers should “eventually” see normal inflation levels return.

“Exactly when and how – it’s all about competitive dynamics. Everybody is competitive. Nobody wants to lose any share. So, let’s see how things play out,” he said.

La Fleche pointed out that Metro is already starting to see some price inflation.

The cost pressures have only been increasing over the past year, he said, whenOntario’s minimum wage shot up nearly $3 in January. Fuel, transport, and trade costs have also been piling on.

Canada’s retaliatory tariffs, imposed on July 1, were applied to many American products. Coffee, maple syrup, salad dressing and other products have all seen increases, said La Fleche.

“Now, we’re having a – what I would describe it as – a tsunami of tariff-related request[s] for cost increases from our supplier partners,” said Empire CEO Michael Medline.

Empire, as the parent company to Sobeys Inc., held back on price increases for “some time,” but now must review these tariff-related expenses.

Empire and Sobeys have to pass on the “extra costs to consumers” where it makes sense, said Medline.

“We don’t like to pass on cost, but there’s no way you can avoid it with the inflationary pressures that we are now seeing.”

Galen Weston, Loblaw CEO, believes price increases will be “moderate” when looking at historical averages. Weston predicts food inflation to be 1% to 1.5%, what he calls “the normal range as opposed to higher range” of 5% to 6%.

“We don’t yet see it moving into the mid-single digit levels... We don’t think it is likely to do that.”

All these supermarket CEOs outlined their individual plans to grow e-commerce, especially when it comes to home delivery.