Grocery bills could warn of a future recession

Canadian shoppers have pulled back on their grocery spending, and are now working harder to find more deals to save.

In the United States, Costco executives have noticed a change in consumer food habits, which, they say is an indicator of a looming recession.

As Mark Palmer loads his truck after a grocery run to Costco in Ottawa, he can’t help but think about his bill.

"We’re close to $500 a week for groceries for the four of us," Palmer said about his grocery bill. "Beef is very expensive right now and with twin boys, it’s not feasible for us so we’re eating more pork and more frozen meat products that are cheaper than fresh."

Compared with 2022, pork prices have declined, while chicken costs have remained flat.  The cost of a strip loin steak has soared around 12 per cent. 

"There is an increase on everything," said Ryan Murray, who was grocery shopping with his young son Bo. "It’s fruits and veggies for us, especially with the little one. He eats a ton of fruit and Costco is the best deal for fruits for us for the amount we’re eating. But fruit prices, veggie prices everywhere are insane right now."

Which is a contributing factor to why Canadians have decreased the amount of food they buy.  Several retailers have also noted consumer spending on discretionary purchases has declined.

In America, Costco leaders have seen shoppers switching from pricey beef to cheaper meats, like pork, chicken and even some canned meats. Officials say it’s a historical trend common with previous recessions.

"Inflation has violently impacted consumers at the grocery store," says Sylvain Charlebois, food distribution and policy professor with Dalhousie University.

"In Canada, with food sales right now, I would say that would be a contributing factor if we were looking at a potential recession. But the GDP is up and my guess, right now, is that other sectors are doing well but food people are hedging, people are protecting themselves and their pocketbooks as much as possible when they go to the grocery store or at the restaurant when they order.

"They’re very careful with how they spend their money right now."

The Canadian economy grew by more than three per cent in the first quarter, a higher than expected outcome, but also raises the chance of another interest rate hike, as inflation has been slow to dip. 

For consumers like Murray, he says all these factors will just make buying groceries more expensive.

"I feel like we’re in the beginning stages of a recession now to be honest," he says. "Ever since 2020 came around, everything has been up and down and everything will keep going up and down until eventually it levels out but who knows how long that will take."