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Children prepare school lunches with their father in Toronto. The average family of four is expected to spend more than $17,500 on groceries next year.Gabriel Hutchinson/The Globe and Mail
Expect food to take up a bigger share of household budgets next year.
The latest Food Price Report produced by several Canadian universities is projecting an average family of four will pay an estimated $994.63 more for food in 2026 than this year because of issues like trade and climate change.
The increase, making for an estimated total bill of $17,571.79, comes from a projected 4 to 6-per-cent inflation rate for food next year, according to the report produced by the agri-food analytics lab at Dalhousie University in partnership with several other universities.
The inflation rate is higher than the roughly 4 per cent seen this year, and would outpace an overall inflation rate that’s expected to decline to the Bank of Canada’s 2-per-cent target.
The growth in food prices next year is expected even as trade-related price pressures continue to decrease, said lead author Sylvain Charlebois.
“Geopolitics will remain an unknown into 2026, but we are expecting tariffs not to be as much of an issue in 2026 than in 2025, which is good news.”
Canada lifted almost all counter-tariffs against the U.S. in September, while just recently U.S. President Donald Trump also walked back tariffs on more than 200 agricultural and food products.
The U.S. tariffs, which included a 50-per-cent levy on coffee-producing giant Brazil, were also putting upward pressure on Canadian prices for goods that either flowed through the U.S. or were simply feeling a knock-on effect.
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Long shelf-life items like coffee will likely take some time to see prices decline, compared with something like bananas on which the U.S. has also walked back tariffs.
And while trade issues are lessening, the investments companies are having to make in supply chains and diversifying trade partners are also creating higher costs – though not as bad as initially feared, said Charlebois.
“I was a little bit concerned with the buy Canadian movement and people walking away from American products, forcing grocers to import from other places where it could be more expensive,” he said.
“But I actually do think that grocers did a pretty good job finding new sources that were either affordable or cheaper.”
The results could be see in vegetable prices that actually declined 0.9 per cent this year, and fruit prices that were down 1.1 per cent.
The downward trend isn’t expected to continue into next year though, with fruit prices possibly heading one to three per cent higher and vegetables expected to rise three to five per cent.
Meat is the main driver in food inflation though, up 7.2 per cent this year, and projected to rise another five to seven per cent next year.
Prices are rising as cattle herds in January were at their smallest level since 1988, the report said, noting that drought has pushed up feed costs while packing and processing costs are also increasing.
“The beef situation is problematic,” said Charlebois.
“I honestly do not understand why Ottawa is not looking into this.”
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While beef imports are already rising from Mexico, he said the government should be looking to allow more imports from countries like Australia to ease the pressure.
As beef prices have climbed, more buyers have shifted to chicken which has also caused prices to spike there, though it takes much less time to adjust flock size than cattle herds, he said.
The droughts helping push up beef prices can be linked to the wider issues of climate change that continue to disrupt systems, said Sadaf Mollaei, an adviser to the report and the Arrell chair in the business of food at the University of Guelph.
“Climate change has a very significant effect on prices, and it will most likely increase the prices because of these severe climate situations that we see in places where food is produced,” she said.
“If there are wildfires in California, if there are droughts in parts of Canada, when the length of seasons change, it’s going to impact crop production and it’s going to impact the supply chain.”
The report noted that prices rose significantly this year because of weather issues on a range of imports including coffee and tea, cocoa, strawberries, oranges, squash and carrots.
Mollaei said there is some movement toward more plant-based sources of proteins, but that it should be happening because consumers see them as healthier and more sustainable, not because people can’t afford other options.
Seafood should remain more in reach next year, with prices expected to rise one to two per cent, while dairy and eggs could see a two to four per cent gain.
Restaurants will likely get pricier with a four to six per cent projected increase.
One other area to watch in 2026 is what effect the Canada Grocery Code has, with formal operations launching in January.
Charlebois said the code of conduct could help suppress the power that grocers have over their suppliers, which could help lead to more price stability.
“Getting processors, vendors, and grocers to the table to negotiate in fairness, in good spirit, will eventually help consumers over time,” he said.
“So 2026 is going to be an important year in that regard.”
