Grocery retailers continue to grapple with inflationary pressures, with Metro Inc. (MRU.TO) becoming the latest company to report a spike in food inflation in its most recent quarter.
The Montreal-based company says its internal food basket price increases jumped to 5 per cent in the 12-week period ending March 12, a rise from 3.5 per cent in the previous quarter.
"Clearly the inflationary picture is accelerating, so that's having an impact on consumers," Metro chief executive officer Eric La Flèche said on a conference call with analysts on Thursday. La Flèche adds that the company is seeing a shift in consumer behaviour in the wake of rising inflation, with more people seeking discount brands and cheaper items in pricey categories.
"There's a search for value. There's a shift to discount happening for sure and customers are trading down," he said.
"There's high inflation in certain categories. I can think of certain meat cuts in particular, so that's having an impact on consumer behaviour. They're trading down for cheaper cuts."
The results come as inflation continues to run hot in Canada, with consumer prices rising 6.7 per cent year-over-year in March, according to Statistics Canada data released Wednesday. StatCan says the increase marks the largest gain in the Consumer Price Index (CPI) since 1991. Groceries were 8.7 per cent more expensive year-over-year, with pasta up 17.8 per cent, butter rising 16 per cent, and cereal climbing 12.3 per cent from 2021 levels.
A recent Yahoo/Maru Public Opinion poll found that the rising cost of food has forced a majority of Canadians to cut back to just the necessities. The survey also found that over half of Canadians (52 per cent) say they are buying less food because of rising costs. Another 51 per cent say they are choosing to buy groceries at discount chains, while 56 per cent say they are cutting back on purchases of red meat because of the high price.
Metro says that higher-than-normal inflationary pressures, combined with ongoing labour shortages, could put pressure on the company's margins if both issues are prolonged.
"Everywhere in the business, we're trying to manage our costs," La Flèche said.
Metro reported a profit of $198.1 million in the quarter, or 82 cents per share, up from $188.1 million last year, or 75 cents per share. Total sales hit $4.27 billion, up 1.9 per cent from the same period last year.
With files from Jessy Bains.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.