Prices for many foods coming down, but inflation has left a legacy

Prince Edward Islanders may have noticed prices for some groceries falling in the last few months, but the pain of inflation over the last three years has not disappeared.

In some cases, prices gathered by Statistics Canada show significant drops recently.

From August to February, beef prices fell 16.4 per cent, bread and grains are down 9.8 per cent, and frozen produce is down 7.4 per cent. Prices of those three commodities, however, remain high compared to January of 2021, up between 17 to almost 30 per cent.

More relief may be on the way, however. 

"Consumers are retreating. They're just not spending the same amount of money at the grocery store," said Prof. Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University in Halifax.

"We are seeing food sales stagnating while the population is growing. That's a bad sign for grocers, for sure. To actually get people back in stores you need to revisit your pricing strategy, and that's exactly what's going on right now."

This retreat by consumers on the Island is relatively recent. In 2021 and 2022, the increased spending on groceries on P.E.I. was running well ahead of the increase in prices. In 2023, however, spending fell behind.

The consumer price index for groceries in 2023 was 22.6 per cent higher than it was in 2020, but spending on groceries was up only 20.2 per cent.

It's a sign that Islanders were adjusting their buying in order to spend less on groceries.

"That's what we predict people will do," said UPEI economics Prof. Jim Sentance.

"If prices aren't moving evenly across the board, then people are going to look at where are you seeing price increases, where are you seeing prices staying the same or maybe sales happening. You'll shift your consumption around."

Where that change is happening, said Charlebois, is where some of the biggest price increases of the last three years were seen.

"We are seeing people moving away from the meat counter altogether, thinking that the meat counter is just way too expensive," he said.

And that's not good for grocers, he added, because profit margins at the meat counter can be 40 per cent or more.