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Canadians facing food insecurity amid rising costs and inflation

Posted on June 22, 2022 by Taber Times

Loblaws has increased its profits by 40 per cent over the past year, according to a recent update provided by the president of the company, Galen Westin, and yet claims to be operating on razor-thin margins. The main narrative being peddled by Loblaws so far is that margins remain tight despite the sharp and noticeable increases in necessities like groceries over the past 24 months.

Loblaws net earnings increased by 17 per cent, which according to the company is a result of increases in sales of over-the-counter medications and prescriptions. In addition to this, cosmetics and hygiene products such as deodorant, which had previously reportedly suffered during the “stay-at-home” saga of the pandemic, have experienced a sharp uptick in sales as the world opened back up.

According to recent financial reports, Loblaws experienced a 5.4 per cent increase to nearly $3.5 billion in drug store sales, in addition to the 2.4 per cent increase in food sales.

The Canadian Centre for Policy Alternatives’ David Macdonald headed a study, titled, “Pressure Cooker” which examined stagnant and dwindling wages and inflation in Canada. It was revealed around one-quarter of recent price inflation is a result of higher profits, and not a result of increasing labour costs or supply chain issues.

“Since most workers have been experiencing real wage losses over the past two years, it clearly isn’t workers’ wages that are driving inflation,” reads the 2022 report. “The ‘wage-price spiral’ is sometimes looked to as explanatory of inflation: the theory that workers’ wages drive inflation and then workers seek higher wages to compensate for higher inflation. Since the start of the pandemic, workers’ wages haven’t kept pace with inflation, a trend that is particularly true for public sector workers.”

The Toronto Star recently reported on an investor conference call with Loblaws executives. It was reported that Loblaws prices inventory and products in relation to its competitors.

So, in short Loblaws and other corporate giants have opted to continue to claim the margins on necessities such as groceries and drugs are thin, while adopting a pricing model determined not by the existing cost of goods, but rather by their competitors.

This shouldn’t really come as a huge surprise, given grocery retailers (including Loblaws) were in recent years, accused by the Competition Bureau of Canada to have been involved in a 15-year-long scheme known as “The great Canadian bread price-fixing scandal.” It was alleged that from 2001 to 2015, participating retailers were responsible for a 96 per cent increase in bread and roll prices, while CPI for all food purchased increased 45 per cent. The informants, (from Loblaws) said retailers (among which included Loblaws), colluded to boost bread prices and later “strong-armed retailers,” to also increase their prices.

As of 2022, Loblaws has admitted to pricing in relation to say its competitors, regardless of how large the existing margin already is. In other words, they are charging what they want because they know they can, because their competitors are already doing the same. And as pointed out, wages have stagnated, (an issue for another time). The result is that now more than ever, Canadians are facing food insecurity and worrying about basic necessities, all while putting even more money in the pockets of multi-billion dollar corporations, solely because grocery giants like Loblaws knows it can, and will, get away with gouging.

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