Consumers should see lower grocery prices when they head to local supermarkets in 2017.
Kevin Grier runs the Kevin Grier Marketing Analysis and Consulting in Guelph, Ontario and says the decline is mainly due to the current state of commodities.
“The raw commodities such as cattle, hogs, wheat and oats and fundamentally those commodities are at fairly low levels compared to relative history so there’s nothing about the commodities right now that are pointing to higher grocery prices.”
Another major reason is the vigorous competition between Wal-Mart and Costco who have performed several price-cutting moves that will likely keep food store inflation around 2%.
“Over the long term, we typically see food price increases anywhere around 2 to 4 percent and if it goes above that something is really wrong. I don’t have a crystal ball but I’m just pointing out that if anything we’re going to be on the lower side of that range,” says Grier.
Another surprise to Grier was the decline of egg prices across the country which have fallen 7% since November.
It was a development that came as a shock to Grier. “Eggs are a very important item in most consumers basket. It’s a supply management commodity and we don’t often think of it as a commodity that is subject to price declines.”