Canada’s major grocers have come under fire for making billions of dollars in profits while Canadian families struggle to put food on the table, but a veteran money manager says grocers aren’t to blame for high food costs.

Big Canadian groceries stores are set to make around $3.5 billion in profits this year, according to David Baskin, chairman and CEO of Baskin Wealth Management. However, he argued that the number isn’t as big as it seems.

“(It) sounds like a lot of money until you divide it by 14 million Canadian households, and that means that the total profits of the industry come out to about $250 per household per year,” Baskin told BNN Bloomberg on Monday.

Baskin argued that even if those profits were to fall in half, Canadian households would only save around $125 per year, or $2.50 per week.

“That’s not going to solve anybody’s inflation problem,” he said.

“Whatever is causing inflation, it’s not grocery store profits. It’s simply too small a number,” Baskin said.

Baskin also said that the total amount Canadians spend on groceries, which works out to about $7,000 annually per household, has been “falling radically” for the last few decades in tandem with restaurant spending.

“Canadians spend less money now on food than pretty much any time ever,” he said.

“So, $7,000 is a lot of money, and for lower income households, food inflation has been a serious thing, but it’s not the grocery store’s fault,” he said.

SUPPLIER COSTS

Baskin made the case that the higher prices consumers are seeing in grocery stores are coming from suppliers, not the grocers themselves, noting that most grocery stores see profit margins of less than four per cent.

“You’ve had disruptions because of Ukraine, higher labour costs, higher interest costs, our own Canadian food marketing boards, which raise the price for dairy and eggs and poultry every year like clockwork; those are external inputs,” he said.

“The grocery stores can’t do anything at all about that.”

POLITICIANS’ INVOLVEMENT

Baskin says that he’s worried about political interference in the grocery industry, saying that any corporation that makes profits as consumers struggle to afford their products usually comes under fire as an “easy target.”

“Everybody likes to hate the big guys who are making money,” he said.

“When gas prices are high, people get mad at the gas companies, people get mad at banks because of fees, now people are mad at grocery stores, because of food inflation. It doesn’t mean it makes any sense, but it also doesn’t mean that the politicians won’t listen and do something silly.”

The heads of some of Canada’s largest grocers sat down with federal ministers last month, where they agreed to “work with” the federal government to combat high food prices.

As a result of those meetings, the government said grocers had promised first steps such as price freezes, price matching and discounts to help stabilize prices. But it was unclear as of last week what, if any, price measures individual companies were taking.

Baskin added that with or without further government intervention, he believes food inflation will be brought under control next year.

“I don’t think food inflation is going to be a huge problem in 2024,” Baskin said.

“The politicians I guess will probably kick the can down the road, the grocery stores will say something to placate their consumers, and we’ll be on to the next.”

Statistics Canada is set to release inflation figures for September on Tuesday, including the latest reading on food prices in Canada.