Food inflation on the rise since 2022, peaked again at the end of 2025: Bank of Canada

Food inflation in Canada has been increasing relentlessly, even more than inflation on other goods, spiking again at the end of 2025.

Since 2022, Canadians have seen grocery prices rise by about 22 per cent in contrast with other consumer prices that have gone up on average by 13 per cent, according to the Bank of Canada.

In a February article published on the Bank of Canada website entitled “Understanding the resurgence of food inflation in 2025,” Olga Bilyk writes that food inflation reached 5 per cent in December, the highest since late 2023. Bilyk is a senior economist with the Canadian Economic Analysis Department at the BoC.

Food inflation is the measure economists call the year-over-year increase in food prices. And in 2025 it “was elevated,” she confirms.

“Rising food prices have a large and immediate effect on households,” says Bilyk. “So it’s important for (households) to understand what affects food inflation and how long these effects may last.”

For 2025, she writes, the “main culprit” was the costs associated with directly imported processed food. Imported food prices began rising early in the year, she says.

“Notably, in December 2025, coffee and confectionery such as chocolates and candies were 31% and 14% higher, respectively, than they were in December 2024. Both items were affected by supply shortages — caused by issues such as extreme weather — and trade tariffs.”

Turning to the domestic market, Bilyk writes that the expenses involved in farming live animals were driven up by drought and increased feed costs. As many Canadians have noted, beef prices have jumped. They were 17 per cent higher in December 2025 than in the year previous.

Bilyk’s article sets out how food inflation evolves.

“Food is farmed, processed, packaged, transported and sold wholesale before you see it in the grocery aisle. So how much does each of these production stages matter for food prices?”

To answer her own question, she dug into Canada’s supply chains. The path that food takes to end up on your plate is a long one, she writes.

Some food sold in grocery stores is directly imported. It is ready to be sold without involving any other production, for example olive oil. Otherwise, it’s made in Canada using domestic goods, for example wheat or eggs, or imported goods such as foreign-sourced ingredients. (It should be noted that Bilyk’s analysis excluded fruits and vegetables, as she said their prices tend to be volatile, driven by changing weather conditions.)

Aside from direct imports or domestic goods, Bilyk checks off other factors that go into grocery prices such as: international shipping, the cost of fuel, business expenses, wages, and lastly, profits and taxes.

She explains cost pressures take time to be fully reflected in the prices we pay. That’s because grocers use long-term contracts, hold inventories of goods bought for different prices, and wait to see whether cost pressures will persist.

Bilyk found it “takes between six and nine months for … cost pressures to be fully reflected” in the prices Canadians pay in grocery prices.

Going forward, Bilyk noted that pressures from import costs eased in the second half of 2025, while domestic cost pressures, such as those affecting meat prices, persisted. So, she suggests, inflation for imported packaged food is bound to ease, while meat prices are still going to pinch.

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