Food inflation up in September despite end to counter-tariffs

Annual price hikes at the grocery store have largely trended higher since a recent low in April 2024, Statistics Canada said on Tuesday. Products prepared in Canada are displayed prominently at the end of an aisle at a grocery store in Ottawa, on Wednesday, April 2, 2025. THE CANADIAN PRESS/Justin Tang

Canadian households are continuing to pay more at grocery stores as food inflation climbed four per cent in September compared with the same month last year.

Annual price hikes at the grocery store have largely trended higher since a recent low in April 2024, Statistics Canada said on Tuesday. Food inflation in August was up 3.5 per cent from a year ago.

The federal government ended 25 per cent counter-tariffs, which contributed to higher costs for food imports, in September as the two countries continue to negotiate on trade.

CIBC senior economist Andrew Grantham said high food inflation came as a surprise, given retaliatory tariffs on the U.S. were dropped in September.

“We’d actually expected that with the retaliatory tariffs being reduced, that maybe we could get a little bit of an ease in food price inflation,” Grantham said.

Short supplies of beef and coffee are persistent factors fuelling higher prices, StatCan said.

Fresh vegetable prices were up 1.9 per cent annually in September after a decline in August, and sugar and confectionary costs also accelerated to an increase of 9.2 per cent compared to 5.8 per cent the previous month, the agency said.

“When it comes to grocery prices, we have seen that there are environmental factors that play into some of those, particularly fresh fruits, vegetables,” said Grantham. He suspected a weak loonie also contributed to higher grocery bills.

Annual inflation accelerated to 2.4 per cent last month, StatCan said. That’s a jump of half a percentage point from 1.9 per cent in August.

RBC Capital Markets analyst Irene Nattel said food inflation reached a 21-month high in September, and was up 27.8 per cent on a cumulative five-year basis.

She said food prices are likely to remain elevated for the rest of the year as grocers look for local suppliers and U.S. alternatives amid ongoing tariff tensions and relatively strong Buy Canadian sentiments.

Grocers swiftly pivoted to local suppliers earlier this year as the Buy Canadian movement gained steam in response to the U.S. tariff war.

Nattel said consumers are also expected to continue their hunt for value.

“Against this backdrop, we expect ongoing consumer trade-down to discount banners/channels and private label products with sustained promotional/competitive intensity,” she wrote.

Major grocers — Loblaw, Empire and Metro — reported their internal inflation measures remained lower than or generally in line with the fixed basket of StatCan’s inflation metrics during their second quarters.

Nattel said that’s “indicative of consumer trade-down to discount and private label to moderate impact of higher food prices.”

She expects a similar outcome from the grocers during the upcoming earnings.

This report by The Canadian Press was first published Oct. 21, 2025.

Ritika Dubey, The Canadian Press