Sun, 01 Oct 2023

The chains will face consequences if they do not come up with ways to stabilize prices, the authorities have said

The Canadian government is taking aim at grocery stores, warning them of "big consequences" if they fail to provide "relief for Canadians" by stabilizing food prices by October 9. This comes amid rising inflation in the country and as Prime Minister Justin Trudeau's Liberal Party trails badly in the polls.

Speaking at the Liberals' national caucus retreat in London, Ontario on Thursday, Justin Trudeau said he expects "to hear from them [the largest grocery chains] by Thanksgiving on what their plan is to stabilize prices," adding that "if their plan doesn't provide real relief for the middle class and people working hard to join it, then we will take further action, and we are not ruling anything out, including tax measures." 

The minister of innovation, science and industry, Francois-Philippe Champagne, said in an interview with the CBC that he sent out invitations to the CEOs of Loblaw, Sobeys, Metro, Costco, and Walmart - the biggest grocery chains in the country - to attend a meeting in Ottawa on Monday to come up with "meaningful action that would reduce price inflation in the grocery sector." 

Champagne did not elaborate on what kind of "tax measures" the prime minister had in mind, but reiterated that there would be "consequences" if they failed "to come to the table with a meaningful solution."

The move comes amid soaring prices in Canada and reports that the grocery giants have seen record profits.

"It's not okay that our biggest grocery stores are making record profits while Canadians are struggling to put food on the table," Trudeau told a press conference Thursday. 

The grocery CEOs denied the allegations of price-gouging and profiteering from the inflation, arguing that "the grocery chains operate with extremely small profit margins and have minimal influence on inflation." 

The Retail Council of Canada that represents Canada's big grocery chains argues that focusing solely on grocery stores will not solve the problem of rising food cost as it is just a "tip of the iceberg" and instead urged the government to "look in the mirror." According to Karl Littler, senior vice president of public relations with the Retail Council, it's "the government public policies" such as ever rising carbon tax that affects farmers and food distributions, limiting the use of plastic that keeps the food fresh, fertilizer cost and vendor cost price increase that mainly contribute to price spikes. 

"If they don't look at what's below the surface and what's actually driving food prices, then it's not going to be a very helpful exercise," said Littler.

The Trudeau government has come under fire for the weak response to the current financial crisis. The main issue remains housing affordability, with the benchmark housing cost doubling since 2013. The food cost has been rising at the rate exceeding the inflation, but in December 2022 Trudeau rejected taxing the profit of grocery stores arguing that the cost will be passed on to the consumers.

The public has been showing growing discontent with Justin Trudeau's handling of the economy, with the recent polls suggesting that only 26% of Canadians would vote for the Liberals if the elections were held today, with Conservatives taking the lead.

For more stories on economy & finance visit RT's business section

More Ottawa News

Access More

Sign up for Ottawa News

a daily newsletter full of things to discuss over drinks.and the great thing is that it's on the house!