Walmart, Costco not making food costs worse in Canada, experts say

Experts say the Canadian presence of U.S. retail giants such as Walmart and Costco isn’t likely to blame for rising grocery prices.

That’s despite Canadian grocery chain executives having pushed for MPs to question those retailers as part of their study on food inflation.

University of Toronto economist Ambarish Chandra called ongoing hearings before a parliamentary committee studying the issue “performative,” saying all retailers seek to maximize profits despite their stated efforts to minimize price hikes.

“It’s easy to call on the foreign companies and make them explain why they’re fleecing hardworking Canadians,” Chandra said. “It’s not as though American grocers are taking advantage of Canadians and Canadian grocers aren’t. The grocers are going to charge what they can get away with, what the market will bear.”

His remarks come as Canadian grocers and consumers are under pressure as food prices continue to skyrocket despite overall inflation easing in recent months.

Grocery prices were up 10.6 per cent in February compared with a year ago, while overall inflation was 5.2 per cent. The grocery inflation rate was down from an 11.4 per cent year-over-year increase in January.

Walmart Canada president and chief executive Gonzalo Gebara told the parliamentary committee Monday that his company is not trying to profit from food inflation. Instead, he insisted it is striving to maintain a price gap between its products and those sold by its competitors.

Walmart Canada’s gross profit rate for its food business and its total operating profit in dollars declined last year, he added.

Pierre Riel, Costco’s senior vicepresident and country manager for Canada, is scheduled to appear before the committee April 17. A Costco spokesperson did not respond to a request for comment on Riel’s appearance.

Canadian grocers including Loblaw chair and president Galen Weston told the committee earlier this month food inflation is not being caused by profit-mongering, insisting their margins on food have remained low.

But Chandra said that framing is merely “window dressing.”

“We’ve seen, frankly, bad behaviour from these grocers over the years, whether it’s price fixing or other sorts of scandalous issues, like co-ordinating on reducing pay for cashiers during the pandemic — all of these things stemmed from the fact that we just don’t have enough competition,” he said. “We should look into encouraging competition, and one way to do that is to actually have more foreign grocers in the country. So the presence of Walmart is actually good for Canada in the long run, not bad for it.”