Supermarket billionaire Galen Weston and top executives of other Canadian grocery chains pushed back against accusations from lawmakers that they’re gouging customers on food prices.
(Bloomberg) — Supermarket billionaire Galen Weston and top executives of other Canadian grocery chains pushed back against accusations from lawmakers that they’re gouging customers on food prices.
The executives told a parliamentary committee on Wednesday that food price inflation is affecting every country right now, and argued Canada is doing better on this measure than many others.
“No matter how many times you read it on Twitter, the idea that grocers are causing food inflation is not only false, it’s impossible,” Weston said.
Weston’s grocery chain, Loblaw Cos., earned C$2.66 billion ($1.93 billion) before taxes last year, at a pre-tax margin of 4.7%. That was up slightly from 4.6% a year earlier. Weston told the lawmakers that underlying food prices have been increasing 25 times faster than his company’s profits.
Grocery Basket
Still, Canadian consumers continue to be hit hard by the rising price of groceries, even as the headline inflation rate has been falling. Prices on store-bought food have remained above 11% over the past five months, while Canada’s overall consumer price index rose 5.9% year-over-year in January, down from a peak of 8.1% in the middle of last year.
Alongside Weston, the committee also heard from Eric La Fleche, chief executive of Metro Inc., and Michael Medline, head of Empire Co., which owns the Sobeys supermarket chain.
The grocers were grilled by lawmakers from every party, and in an usual move, the left-wing New Democratic Party sent its leader Jagmeet Singh to the committee to directly do the questioning.
Singh honed in on Weston, and accused his company of making C$1 million per day in excess profits. “How can you look a family in the eyes and tell them that that’s okay?” Singh said.
Weston responded that he had a similar conversation with a customer in one of his stores the other day, and he explained to her that underlying food inflation meant prices had to rise.
“If we didn’t raise retail prices as costs went up, the companies that we operate would disappear almost instantly,” Galen said.
He also told the committee that more than half his company’s business is made up of pharmaceuticals, apparel and financial services, and that his company’s grocery margins remain thin.
Earlier in the day, Canadian Finance Minister Chrystia Freeland told reporters she believes grocery store chains have a duty to do everything they can to get prices down.
“Grocery CEOs have a responsibility to their customers, and they have a responsibility to all Canadians, to work really, really hard with all of us to get inflation down,” Freeland said. “And they absolutely do have a responsibility to all of us to be transparent about why those prices are so high.”
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