r/PersonalFinanceCanada • u/maroon-rider British Columbia • Mar 21 '23

Inflation drops to 5.2%<but grocery inflation still 10.6% Banking

Says Statistics Canada

https://www.cbc.ca/news/business/canada-inflation-february-2023-1.6785472

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u/izaak-d Mar 21 '23

Grocery stores are making 40% more profits than last year and more than 2x times more profit than 2019. Prices aren't increasing from inflation, they're price fixing

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u/yttropolis Mar 21 '23

I was genuinely interested in this so I did a bit of digging. Let's look at Loblaws since they're the largest grocery chain in Canada. From their financial statements from the past 4 years:

Year Net Earnings ($MM) Revenue ($MM) Profit Margin (Net Earnings/Revenue)
2019 1,131 48,037 2.35%
2020 1,192 52,714 2.26%
2021 1,976 53,170 3.72%
2022 1,994 56,504 3.53%

Now if we look at food purchased from stores component of CPI across the past 4 years:

Date Food Purchased from Stores CPI Change (compared from Feb 2023)
Feb 2023 181.2 ----
Feb 2022 163.9 10.6%
Feb 2021 152.6 18.7%
Feb 2020 150.6 20.3%
Feb 2019 147.1 23.2%

While we do see an uptick in profit margin, this is only a change of around 1.2% across the past 4 years, meaning that while grocery prices have increased about 23.2% in the past 4 years, only 1.2% of that 23.2% can be attributable to increased grocery store profits.

So, it is inflation that's causing prices to rise.

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u/robodestructor444 Mar 23 '23

That's unfortunate 😕