This article originally appeared in the Financial Post. Below is an excerpt from the article.
By Jack Mintz, April 21, 2023
It isn’t surprising that NDP leader Jagmeet Singh would argue food inflation is due to price gouging by grocery companies. His business is politics after all, not a truth-finding mission. What was surprising was the weak response of grocery CEOs before a parliamentary committee last month: they seemed ill-prepared to deal with the accusation they were profiting from high food inflation.
Singh backs his claim by citing a Dalhousie academic paper by Samantha Taylor and Sylvain Charlebois, who compared 2022’s first-half profit margins with the average of the previous five years. They estimated that Empire/Sobeys, Metro and Loblaw made almost an annualized $1 billion in excess gross profits, with almost 90 per cent belonging to Loblaw.
Because the five-year averages included some weak years, the paper also compared the 2022 numbers with the most profitable of the previous five years. Using that estimate, excess profitability drops to $260 million. Loblaw’s “profiteering” is estimated to be $1 million per day while the other two firms were actually negative. This led Singh to accuse Loblaw’s CEO Galen Weston of reaping high profits while Canadians struggle putting food on the table.