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Canada抯 fruit, vegetable prices to rise sharply in 2015: reportWednesday, February 04, 2015 > 08:44:37
(Globe and Mail)
Canadians face sharply higher prices for food – especially fruits and vegetables – after the dollar’s plunge, a new report says.
The price of vegetables will rise by as much as 7.5 per cent this year, while fruit will cost up to 5 per cent more, said a report from Ontario’s University of Guelph that pegs the overall rate of food inflation for 2015 at 0.7 per cent to 3 per cent.
The university’s Food Institute revised an earlier report in light of the Canadian currency’s plunge. When it published the initial report in early December, the dollar was worth 88 cents (U.S.) against its U.S. counterpart. It now sits at just less than 80 cents.
“While we expected the Canadian dollar might soften somewhat, we did not anticipate the degree to which it decreased,” the report said.
Three per cent is the high end of the revised overall level of food inflation, up from 2.4 per cent.
The currency, which generally tracks oil prices, has fallen from 94 cents in the summer. The price of oil was cut in half to about $51 a barrel in that time.
Canadians spend about a quarter of their grocery budgets on fruits, vegetables and nuts. Much of this food comes from drought-stricken California and has already seen significant inflation.
“Because they are edible imported products, and there is a lack of substitutes, they are especially vulnerable to currency fluctuations,” the report said.
Canada imports more than $40-billion worth of food in a year, a figure that has increased as several Ontario food processing plants have closed.
This means Canadians are paying higher prices for food such as cereal and some meat products, which used to be made here but is now imported. The university notes cereal imports rose by more 8 per cent in 2014, a year in which Kellog Co. shut its factory in London, Ont.
The University of Guelph did not revise its forecast for 5-per-cent inflation in meat, seafood, dairy products or grain. Pork has climbed sharply in the past year after a piglet-killing virus swept through U.S. and Canadian hog operations and reduced the number of animals going to market.
Lower oil prices should have some modest benefits for people living in remote areas as energy and fuel bills fall. But the inflationary effect of the cheaper currency will outweigh these gains, the report said.