Canadians feeling squeezed at the grocery store should look to Ottawa next week as executives of Canada’s biggest grocers are set to field questions from MPs about rising food prices.
The House of Commons committee studying inflation and food prices has summoned the heads of Metro Inc., Loblaw Co. Ltd., and Empire Company Ltd., which owns stores including Sobeys and Farmboy. For the first time, CEOs will have to directly respond to inquiries about their role in increasingly unaffordable cost of groceries.
Their long-overdue appearance before Parliament marks an important turning point. Politicians and the public are starting to recognize the role that corporate profits have played in driving inflation.
Reports show that the profit margin of Canadian corporations has jumped significantly. From an average pre-tax margin of nine per cent over the previous two decades, the margin reached almost 16 per cent in 2021. Preliminary data for 2022 suggests profit margins are still elevated.
Corporations are not just passing along higher costs. Many are taking advantage of turmoil in the global economy to boost profit margins.
Latest figures from Loblaw parent company George Weston Ltd. show the grocery giant claimed net profit of $529 million in the last quarter as revenue increased by 10 per cent from last year.
Loblaw denies taking advantage of inflation, but the company has increased its gross markup from 44.3 per cent in 2019 to an astounding 46.7 per cent in 2022.
If the grocery giant had maintained its 2019 markup, Canadians would have saved almost $900 million.