Canada's Grocery Prices May Keep Outpacing Inflation Despite Cooling Trends

RBC Economics warns that Canada's grocery prices may continue to rise faster than overall inflation. According to RBC, supply-chain friction, stubborn meat prices, and a weaker loonie are putting pressure on food bills.

The bank argues that the 'inflation is cooling' story can still feel wrong at the checkout because food has its own drivers. A weaker Canadian dollar makes imported ingredients and packaged goods more expensive in Canadian dollars, while tight cattle numbers limit beef supply, keeping meat prices elevated.

RBC economist Salim Zanzana notes that processing, labor, packaging, wholesale, retail, and transport costs can make up as much as 90% of a grocery item's final price. These service-heavy costs tend to come down slowly once they've risen, making it harder for prices to roll back even if some raw commodities cool.