Price growth at restaurants outpacing grocery inflation as businesses struggle

"When we started to see these initial inflationary pressures start to creep in, restaurateurs were a little nervous to start passing on those increases in costs to the guests," said Kelly Higginson, president and CEO of Restaurants Canada.Grocery inflation continued to slow in March, rising just 1.9 per cent compared with a year earlier, Statistics Canada reported on Tuesday. That's down from February's annual rate of 2.

Restaurant owners are struggling with a variety of inflationary pressures, including rising insurance and labour costs and higher interest rates, said Higginson. But grocery inflation began moderating into the second half of 2023, and September saw a reversal of the trend as grocery inflation dipped below restaurant inflation.It's been lower ever since, while restaurant inflation has remained above five per cent.

One of the main challenges has been weak sales, said the report, as consumers continue cutting back on discretionary spending amid rising costs. Restaurant prices were one of the five biggest contributors to overall inflation in March, Statistics Canada said, along with mortgage interest, rent, gasoline and car insurance premiums.

The pressure has led more shoppers to seek out relief at discount grocery stores, or by buying private-label products instead of brand-name. The major grocery chains have responded by opening or converting more discount stores, in particular Loblaw, which opened more than 30 new Maxi and No Frills stores last year.

Source: News Formal (newsformal.com)

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