CANADA – Fruit and vegetable prices are set to rise in Canada as that country’s dollar, the loonie, continues its downward slide.
The Food Price Report 2015, a report from the Food Institute of the University of Guelph, has been updated to show forecasts for food prices based on the loonie’s latest decline.
At the time of the first report, the loonie was worth U.S. $0.88. It has since fallen to its current level of $0.80. This sudden fall has been credited in part to Canada’s lowest crude oil price, coupled with lower interest rates. This is Canada’s largest 2-year drop ever.
In the initial report, the prices for vegetables were forecasted to increase 3% - 5%. Now with this new update, they are forecasted to increase 5.5% - 7.5%. Similarly, the increases for fruits and nuts have been raised from 1% - 3% to 3% - 5%.
There are, however, no changes forecasted for Meats, Fish & Seafood, Dairy Products and Eggs, Grains and Hospitality.
“Edible vegetables, fruits and nuts are likely to see significant price increases. Fruits, nuts and vegetables represent anywhere from 15% to 25% of the average Canadian household’s food expenditures, clearly making it an important component of consumers’ nutritional diets,” the report says, adding that a lack of substitution makes these commodities especially vulnerable to currency fluctuation.
Overall, food price forecasts for Canada have been increased from 0.3% - 2.4% up to 0.7% - 3.0%.
With further interest cuts by the Bank of Canada looming and rate increases by the American Federal Reserve expected, several analysts predict that the Canadian dollar could fall to $0.75 or lower.
Stay tuned to AndNowUKnow as we track the decline in the Canadian dollar and its effect on produce prices.
