Canada’s largest supermarket chain is freezing prices on all of its No Name products for the next three months.
Loblaw Companies Ltd. – which operates supermarkets such as Loblaws, Zehrs, No Frills and Real Canadian Superstore – says it has held prices for the popular private label, which includes more than 1,500 grocery items, until January 31, 2023.
In a letter shared with some of his customers Monday, Loblaw Chairman and President Galen G. Weston says the price of an average grocery basket has risen about 10 percent this year, with products like apples, soup and French fries rising even more. .
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Weston said much of this is “insanely” beyond the company’s control, as food suppliers pass on higher costs to Loblaw.
The chain has held back some hikes where possible, he said, but suppliers are battling the same cost increases that consumers face — with higher prices for everything from raw materials to energy and transportation.
“None of these explanations offer much comfort if you’re concerned about your family’s budget and unsure how much you need to pay for food each month,” Weston said in a letter to members of the company’s loyalty program. PC Optimal.
Last year, a battle over higher prices caused the company to temporarily suspend sales of Frito-Lay products in its stores before the two sides reached an agreement.
Supermarket chains have come under fire for making excessive profits at a time when consumers are being stretched by rising inflation.
A few years ago, supermarket chains including Loblaw, Sobeys, Metro and others suffered reputational damage with shoppers when the Canadian competition watchdog discovered they had colluded for years to set the price of bread and other pastries.
Federal NDP leader Jagmeet Singh has rallyed supermarket profits, noting that the major Canadian chains have made $2.3 billion in profits so far this year.
That’s how much supermarket companies have earned so far in 2022.
On Monday I will force a vote in Parliament to look into price inflation and lower your food prices.
Help us pressure Justin Trudeau and Pierre Poilievre to do the same.https://t.co/4n10mrhPkH
Loblaw’s profits have indeed risen lately, with the company posting net income of $387 million in its most recently completed quarter. That’s $12 million more than around this time last year and $121 million more than the same period in 2019, before the COVID-19 pandemic.
At rival Metro Inc. net income came in at $275 million in the most recent quarter, up from $252 million a year ago and $222 million in the same period in 2019.
It’s a similar trend at Empire Co., the owner of Sobeys, which posted a net profit of $187 million in its most recently completed quarter. That was just under $188 million in the same period a year earlier, but up from $120 million in the same period before the pandemic.
Jim Stanford, an economist and director of the Center for Future Work research institute, said that while many Canadian companies have tried to portray themselves as the victims of inflation, their financial results show they are, in fact, contributing to it.
“Corporate profits have risen along with consumer prices, and that’s no coincidence,” he told CBC News on Monday. “The evidence is clear that companies do much more than pass on higher costs.”
As a percentage of Canada’s total GDP, he noted that corporate profits hit an all-time high of nearly 20 percent in the second quarter of this year. While other sectors, notably the energy sector, have seen profits rise at a faster pace, Stanford said, grocers are clearly emerging.
“We should see this as a PR gesture from a company that knows it’s now in the eye,” he said of Loblaw’s decision to freeze No Name prices.
Similar removals in other countries
Loblaw’s decision to freeze prices for the private label brand with its signature yellow-and-black packaging follows similar announcements from grocers in other countries.
In August, French supermarket chain Carrefour announced plans to freeze the prices of about 100 private label products until November 30.
In June, Lidl’s US arm launched a summer price reduction campaign to ease inflationary pressures on customers. The company said it had cut prices on more than 100 items at its stores in nine East Coast states through August.
“We’ve seen grocers voluntarily freeze prices in the G7 for some time now,” said Sylvain Charlebois, a professor of food distribution and food policy at Dalhousie University in Halifax. “It should have happened in Canada a long time ago.”
Still, freezing No Name prices will provide Canadians with much-needed relief, he said, adding that it will also help fix some of the image problems of Canada’s major grocers, Charlebois said.
“This is also a PR strategy…Many Canadians blame grocers for food inflation,” he said. “Some of it is deserved…but much of that criticism is unfair because food prices can rise for a variety of reasons beyond a grocer’s control.”