Canadian Food Prices Drive Growing Household Insecurity and Health Risks

Canada’s 11.4 per cent grocery price increase

The headline figure of slowing food price growth masks a deeper, more persistent financial strain for many Canadians. According to analysis, the price of fresh fruit went up by 12.9 per cent and fresh vegetables by 11.8 per cent. Canada is now in the grips of a growing food insecurity crisis, with many low-income and fixed-income households faced with the difficult decision to either pay their bills or put food on the table at a time when even the price of staple items has skyrocketed.

This financial pressure is creating major effects on public health as more Canadians may opt for unhealthy food or skip meals altogether due to rising costs. In the UK, the latest inflation figure remains above the Bank of England’s target of 2%. Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, noted that a rate increase when the Bank meets next week is unlikely. Rate-setters may want to assess the impact of any measures announced by the new Prime Minister before deciding whether to tighten policy again, she said. Thiru added that rising inflation will likely become a more notable economic headache for Healey, squeezing his fiscal headroom, raising borrowing costs, and increasing financial market volatility.

Bank of England target and Ofgem price cap adjustments

Yael Selfin, KPMG’s chief economist, suggested that the June inflation figure is likely to be the lowest of the year. She noted that higher energy bills, brought about by a rise in Ofgem’s price cap, will likely push inflation up again. Although the impacts from the initial energy shock have so far been relatively limited, if energy prices remain high for longer, second-round effects risk feeding through into wages and more broadly across the economy, Selfin stated. Sarah Coles, head of personal finance at AJ Bell, added: The markets are still only expecting a single rate hike by the end of 2026, but it's expected to hit in September, with another potentially following in February.

These economic pressures are not unique to the UK. In the final quarter of 2011, China’s economy grew at its slowest pace in 2½ years because of shrinking exports, tighter bank lending, and a cooling real estate market. China’s National Bureau of Statistics reported that gross domestic product grew by 8.9% in the fourth quarter of 2011, down from 9.1% in the previous quarter. For the year, the world’s second-largest economy expanded by 9.2%, off from 10.4% in 2010. Many analysts expect conditions to worsen as Europe, China’s biggest export market, shows no signs of stabilizing.

China’s National Bureau of Statistics reports 8.9% fourth-quarter growth

While consumers struggle with the cost of goods, some sectors are seeing shifts in compensation due to talent shortages. Robert Walters, chief executive officer at Robert Walters Group, which recruits for jobs such as lawyers, accountants, and IT professionals, told the BBC’s Today programme that there are shortages in pretty much any country you care to name. The firm has put up its profit forecast for the year. Mr. Walters said that skills are more in demand as every job is getting more complicated. The company is now seeing law firms pay newly qualified lawyers £150,000 per year or more, which he added is “unheard of.”

Robert Walters Group reports pay for newly qualified lawyers

However, this wage growth is uneven. While the sharp rise in hiring activity is a reason to be hopeful, there is a mismatch between available skills and industry needs. Competition is fierce because many workers do not have the skills needed to transfer to the sectors with most demand. Reskilling and supporting people to move jobs which are in demand needs to be speeded up. Otherwise we may see these clear tensions in the labour market turning into a workforce crisis in many sectors, the firm noted.