Sinking Canadian dollar could affect grocery prices


B00Mer
#1
Sinking Canadian dollar could affect grocery prices



The Canadian dollar closed Thursday at 92.15 cents (U.S.), down 0.41 of a cent from Wednesday’s close, according to BMO Capital Markets.

It is the fourth daily drop in a row for the Canadian dollar, which is now at its weakest level since October, 2009.

The drop comes amid indications of a slowing economy, including lower housing starts and building permits and a trade deficit that has grown to nine times the forecast.

Hiring slowed in December, according to a Bloomberg survey.

And Bank of Canada Governor Stephen Poloz said this week he’s under no pressure to raise interest rates. Low interest rates make Canadian investments less attractive to foreign investors.

“We saw weak trade, weak manufacturing and the central bank following up by saying we have no timeline to raise rates any time soon,” said Brad Schruder, director of foreign exchange at Bank of Montreal. “That’s like the trifecta of death for the loonie.”

Charlebois said part of the reason the impact on groceries won’t immediately be felt is that large grocers negotiate contracts with suppliers that set prices for three to six months. Daily variations in currency don’t necessarily translate into immediate price adjustments in stores. They also hedge.

And grocers in Canada today are reluctant to pass price increases along to consumers due of fierce competition in the sector.

Target opened 124 stores in Canada in 2013, all of them offering groceries. Walmart Canada added 1.4 million square feet of retail space in 2013, expanding and renovating stores to add groceries and building new stores offering larger grocery sections.

Costco Wholesale is also in expansion mode, recently opening a new GTA location in Mississauga.

“All food retailers know for a fact that the number-one driver for consumer decisions in stores are prices,” said Charlebois.

Food prices skyrocketed from 2009 to 2011, according to Charlebois. But food prices are expected to increase by no more than 0.5 per cent this year.

He expects the loonie to bounce back to 92-94 cents relative to the greenback.

Rob Gerlsbeck, editor of Canadian Grocer agrees the drop in the value of the loonie would have to be sustained to show up on grocery store shelves in this market.

“They don’t want to raise prices, simply because the environment is so competitive. If you’re the first to raise them and raise them too much and the competition feels they can gain a competitive advantage by not raising prices, they are going to do that – it’s just too competitive right now.”

Kevin Grier, senior market analyst for the George Morris Centre in Guelph, says the items most likely to be affected include fresh produce and meats and in a normal marketplace, the prices would rise quickly.

Competition in the marketplace will dampen that, he believes.

He points out that suppliers and grocers have lately benefitted from a drop in the price of commodities used to make grocery products.

“The sugar market compared to two years ago is pretty good for them. Global commodity prices have been declining, led in part by the huge bumper crop of corn in the U.S.”

Shoppers may not notice an immediate spike in prices at the grocery store as a result of the swooning loonie, but if the Canadian dollar keeps dropping and stays low, price increases are inevitable, say leading experts in food distribution and policy.

“It won’t necessarily affect food prices right away, but if the drop continues, we may see prices for produce and fruits increase in the summer because we do import a lot of fruit and produce,” said Sylvain Charlebois, a professor and associate dean at the College of Management and Economics, University of Guelph.

Organics may be particularly hard hit because more than 80 per cent of organics are imported, he added.

“If the loonie goes up again, say next week or in two weeks time, it will be a non-factor. If it stays below 90 cents for a month or two it will impact food prices,” said Charlebois.

source: Sinking Canadian dollar could affect grocery prices | Toronto Star

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LOL - you guys need to diet anyway.
 
petros
+1
#2
Not could. Will.
 
B00Mer
#3
Quote: Originally Posted by petrosView Post

Not could. Will.

Why I live in the USA... and probably will never return to Canada...

Canada is riding the coat tails of Uncle Sam and is effected in so many ways by the US economy.. at the same time people hate the CRTC because they want US TV, they weekend shop because they want US prices...



Just join the USA already...
 
MHz
+2
#4
Why can't the headline ever be the other way around, too much food lowers dollar value.
 
captain morgan
#5
Quote: Originally Posted by B00MerView Post

Why I live in the USA... and probably will never return to Canada...

Canada is riding the coat tails of Uncle Sam and is effected in so many ways by the US economy.. at the same time people hate the CRTC because they want US TV, they weekend shop because they want US prices...

Just join the USA already...

Ironically, the WH is forcing that fewer nations peg themselves to the US.

Circumstances like 'unusual' trade requirements or protectionist policy force nations to reach out to other markets... KXL is a great example. I believe that Obama will come to regret that decision
 
Spade
#6
Quote: Originally Posted by B00MerView Post

Why I live in the USA... and probably will never return to Canada...

Do you really know where you live?
 
Christianna
+3
#7  Top Rated Post
I'm overjoyed! The lower the loonie drops, the more we get paid into our checking account from US pensions we're entitled to. They pay in U.S. dollars which is converted to Canadian dollars at our Credit Union. I'm rooting for a $0.60 C. dollar!

A lower Loonie helps our exporters which should result in more Canadian jobs. The only people it will hurt are Canadians that are cross-border shoppers and tourists. If they are rich enough to do that, then I don't have a lot of sympathy for either one. I'm always in favour of the working man and more Canadian jobs.
 
Machjo
#8
The dollar dropping relative to a foreign currency does not bother me; domestic inflation does. While a drop in the dollar does not guarantee a rise in the rate of inflation, it definitely increases its risk.
 
petros
#9
Quote: Originally Posted by B00MerView Post

Why I live in the USA... and probably will never return to Canada...

Canada is riding the coat tails of Uncle Sam and is effected in so many ways by the US economy.. at the same time people hate the CRTC because they want US TV, they weekend shop because they want US prices...



Just join the USA already...

If illegal labour were ever cracked down, the price of veggies would make us all carnivores on both sides of the border. Hooray for illegal labour in America!
 
B00Mer
+1
#10
Quote: Originally Posted by petrosView Post

If illegal labour were ever cracked down, the price of veggies would make us all carnivores on both sides of the border. Hooray for illegal labour in America!

You are 110% correct and unfortunately not enough US Citizens are really aware of this... ignorance is bliss.

Alabama immigration: crops rot as workers vanish to avoid crackdown | World news | theguardian.com

Washington Apple Growers Scrambling to Find Workers | Farmworkers Forum
 
petros
#11
And yet everyone complains about all the illegal beaners. The beaners would be working in Chihuahua and Tecate if the Colorado River still ran all the way to the Sea of Cortez
 
coldstream
#12
It's time we re-nationalized the Canadian Dollar and took it back from the sick Free Market fux on Wall Street. Every nation should do the same a re-establish and new Bretton Woods Agreement to impose a narrow trading range on currencies.

With that we could re-assert sovereign control over monetary and credit policy as is every nation's right, instead of having it dictated by these pathetic, greed besotted, utterly amoral Money Market Hedge Fund managers.

At the same time we have to re-establish an integrated national industrial economy by dumping Free Trade.

We will continue on in an economic death spiral without these.
Last edited by coldstream; Jan 11th, 2014 at 02:29 PM..
 
B00Mer
+1
#13
Quote: Originally Posted by SpadeView Post

Do you really know where you live?

WTF are you talking about... as a dual citizen I border jump back and forth...

Right now I moved back to Arlington, TX worked for 4 months then purchased a Big Rig..



So where ever my Big Rig is, well is home..

I'm on the road pretty much all the time.. every 2 to 3 weeks I get back to Arlington.

Quote: Originally Posted by petrosView Post

And yet everyone complains about all the illegal beaners. The beaners would be working in Chihuahua and Tecate if the Colorado River still ran all the way to the Sea of Cortez

I don't complain, I see illegals at the Love's Truck Stop in Eloy or Chandler, Arizona getting out of a Big Rig who smuggled them into the USA and I wish them well...

1. I would NEVER personally smuggle illegals, it's your license for LIFE if you get caught and jail time..

2. I do not wish the Smugglers or Coyote's well, they force illegals to carry drugs, rape and rob many of them and at times leave them in the desert heat to die..

They have no value of life and treat these people like cattle... just a dollar value.

Illegal Immigrants, Desperate To Find Work In The U.S., Risk Kidnapping, Rape and Murder From Those Smuggling Them Across the Border - - News - Dallas - Dallas Observer
 
Machjo
#14
Quote: Originally Posted by coldstreamView Post

It's time we re-nationalized the Canadian Dollar and took it back from the sick Free Market fux on Wall Street. Every nation should do the same a re-establish and new Bretton Woods Agreement to impose a narrow trading range on currencies.

With that we could re-assert sovereign control over monetary and credit policy as is every nation's right, instead of having it dictated by these pathetic, greed besotted, utterly amoral Money Market Hedge Fund managers.

At the same time we have to re-establish an integrated national industrial economy by dumping Free Trade.

We will continue on in an economic death spiral without these.

You just don't go far enough. I call on Ontario to leave the Canadian dollar and extablish the Ontarioo
 

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