Food Price Increases and Inflation Predictions
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Questions and Answers

What is driving food manufacturers to consider raising product prices?

  • Soaring ingredient costs (correct)
  • Higher consumer incomes
  • Decreasing shipping costs
  • Increasing demand for food products

What recent event has complicated the availability of shipping containers?

  • The Suez Canal blockage
  • The Texas winter storm
  • Both B and C (correct)
  • The pandemic

What percentage increase in the price of key ingredients has been reported by Canadian manufacturers?

  • 20 per cent
  • 10 per cent
  • 30 per cent
  • 40 per cent (correct)

Which company plans to raise prices to offset higher costs of materials and shipping?

<p>Procter &amp; Gamble (B)</p> Signup and view all the answers

What issue has created difficulties for obtaining ingredients at the port of Montreal?

<p>A labour dispute (C)</p> Signup and view all the answers

How has the pandemic affected the relationship between food retailers and producers?

<p>They engaged in fierce competition over fees and fines (A)</p> Signup and view all the answers

Which of the following companies is NOT mentioned as a manufacturer signaling possible price increases?

<p>PepsiCo (D)</p> Signup and view all the answers

What is described as creating a 'perfect storm' for inflation in the food industry?

<p>Rising costs from multiple calamities (D)</p> Signup and view all the answers

What did Michael Graydon state regarding the inability to absorb cost increases?

<p>Eventually, manufacturers must take action. (A)</p> Signup and view all the answers

What is Eric La Flèche's prediction for food inflation in Canada for 2021?

<p>1.5 to 2.5 per cent (B)</p> Signup and view all the answers

According to Sylvain Charlebois, what is the expected range for food inflation in 2021?

<p>3 to 5 per cent (C)</p> Signup and view all the answers

What impact might the decline in year-over-year sales have on consumers according to analysts?

<p>Lower prices due to competition (A)</p> Signup and view all the answers

What is a key retail metric referred to as 'comps'?

<p>Current sales compared to the previous year (D)</p> Signup and view all the answers

What behavior do retailers typically exhibit when they face negative comps?

<p>Launch heavy promotions to drive volume (D)</p> Signup and view all the answers

What does Karen Short claim about retailers' views on retail inflation?

<p>No retailer is calling for retail inflation (D)</p> Signup and view all the answers

What has led to dramatic sales gains for Metro and its competitors?

<p>Pandemic restrictions forcing more food shopping (C)</p> Signup and view all the answers

What did Sylvain Charlebois emphasize regarding the cost to produce food?

<p>It is increasing significantly (B)</p> Signup and view all the answers

What does Eric La Flèche mean when he describes the situation as 'volatile' and 'uncertain'?

<p>Future food prices could fluctuate unpredictably (A)</p> Signup and view all the answers

What challenge are grocers facing regarding sales figures compared to the previous year?

<p>Topping historic sales figures from the prior year (C)</p> Signup and view all the answers

Flashcards

Soaring ingredient costs

A significant increase in the price of components used in creating food products.

Perfect Storm of Inflation

A confluence of factors, such as supply chain disruptions and labor disputes, leading to increased prices.

Food Price Increases

Predicted rise in the prices of food products due to increased manufacturing costs.

Supply Chain Disruptions

Obstacles disrupting the smooth flow of goods and services through the supply chain.

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Commodity Scarcity

A lack of raw materials essential for production, driving up costs.

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Price Hikes by Manufacturers

Manufacturers increasing product prices to cover the rising costs they are facing.

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Labor Dispute at Port

A disagreement, like a strike, leading to delays at a port, hampering ingredient delivery.

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Grocery Chain (Metro)

A major grocery store chain that expects no cost increase transfer to consumers.

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Shipping Container Shortage

A lack of containers needed to transport goods, affecting the flow of ingredients to manufacturers.

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Resin Shortage

A lack of resin used for packaging products creating additional production issues.

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Food Inflation in 2021

Predicted to remain steady at 1.5-2.5% in 2021, similar to 2020 but is volatile and uncertain

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Alternative Food Inflation Projection

Expert predicts 3-5% increase in 2021 due to rising food production costs, but unsure about grocery store reality

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Retail Sales Gains (Pandemic)

Grocers saw substantial sales increases due to pandemic-related restrictions, more home-eating

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Historic Sales Comparison

Current sales are compared to last year to measure growth, where panic buying happened

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Negative Comp Growth

A negative comparison of current sales figures versus sales figures from the previous year's corresponding period.

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Retailer's Response to Negative Comp Growth

Retailers will use promotions to get rid of excess stock, driving volume, to boost sales

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Retail Inflation

It is not expected by merchants, since retailers are worried about negative comps

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Volatile and Uncertain

Describing a situation of instability and lacking clear predictions, in terms of the food market, in 2021

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Retailer's Strategy

Retailers focus on keeping customer volume, which leads to potential lower prices due to trying to prevent sales decline

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Price Politics

The complicated factors driving and affecting food pricing, in specific

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Study Notes

Food Price Increases

  • Soaring ingredient costs are forcing food manufacturers to raise prices.
  • Canadian supermarket chain head predicts price hikes won't translate to higher grocery bills.
  • Inflationary pressures are being driven by various factors like the Texas winter storm, Suez Canal blockage, and ongoing pandemic disruptions.
  • Shipping container shortages, port congestion, and commodity scarcity are adding to production difficulties.
  • Resin shortages for plastic packaging are a significant issue.
  • Key ingredient prices for Canadian manufacturers have spiked by up to 40%.
  • Labour disputes at the Port of Montreal, impacting ingredient availability.

Food Inflation Predictions

  • Metro, a large Canadian grocery chain, predicts food inflation will remain steady at 1.5-2.5% in 2021 (similar to 2020).
  • Other experts project food inflation to increase 3-5% in 2021, exceeding 2020's 2.7% rate, with cost of production rises being a key driver.
  • Uncertainty is a key factor in predicting the future of food price increases.

Retailer Strategies

  • Retailers face the challenge of maintaining historical sales figures during the pandemic recovery period.
  • Panic buying, leading to empty shelves, creates a benchmark that retailers struggle to match.
  • Retail strategies may involve promotions to prevent negative same-store sales figures.
  • This can lead to price reductions/rebates/promotions to remain competitive and retain customers.

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Description

Explore the factors influencing food prices, including ingredient costs and inflation predictions from major Canadian grocery chains. Understanding the impact of shipping and production challenges on grocery bills is essential for consumers today. This quiz covers key topics affecting food prices and forecasts for the near future.

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