Can the price of bread make us better voters?
Last week, Loblaw Companies Ltd. and parent company George Weston Ltd. agreed to pay $500 million to settle a class-action lawsuit to account for their role in a bread price-fixing scheme over a 14-year period. In short, this settlement comes with an admission the two companies artificially increased bread prices in concert with other grocery retailers, including Walmart Canada, Giant Tiger, Sobeys owner Empire Co. Ltd. and Metro, which operates only in Ontario and Quebec).
How does this story help us become better voters? By helping us cut through manipulative political hyperbole about inflation and its causes.
The political debate around inflation has been dominated by federal Conservative Leader Pierre Poilievre, who has made “affordability” a core issue in his pre-election narrative, while anointing Prime Minister Justin Trudeau’s Liberal government as the villain.
In late June, as he has done on an almost weekly basis, Poilievre claimed that “reckless inflationary spending” in the last federal budget and the federal carbon tax had “directly” resulted in an inflationary spike that drove up the cost of groceries and rent.
There isn’t enough room here to list all of the reasons why none of this is true, but two reality checks are worth noting.
First, inflation is a global phenomenon, the result of a combination of global conflict, supply chain failures and spiking oil prices. Domestic economic and fiscal policies — including stimulus spending during the worst part of the pandemic — made little or no contribution to inflation.
Second, there was no inflation spike in June; inflation fell modestly in June to 2.68 per cent, down from 2.9 per cent the previous month and down significantly from 3.9 in 2023 and its peak of 6.8 per cent in 2022.
If not the evil Liberal government, what has driven inflation? You can start with good old-fashioned greed, which was a major driving force of the bread price-fixing scheme.
In a statement on the class-action settlement, Loblaw chair Galen Weston admitted his company engaged in pricing practices “that should never have happened.”
It’s pretty remarkable that one of Canada’s largest grocery retailers would admit to conspiring with competitors to boost the price of a loaf of bread by an average of $1.50.
Weston is only owning up to this behaviour because Loblaw/George Weston struck a deal with the Competition Bureau for immunity in exchange for a full confession and giving evidence against the other participants in the scheme. Still, his admission is proof positive that even before the pandemic, the grocery industry had a history of manipulating its prices to increase profits.
A 2023 investigation by the Competition Bureau into rapidly rising grocery-store prices found they were rising faster than the rate of inflation from 2021’s third quarter, well before inflation rates began to spike. And even when inflation topped out at just under seven per cent in mid-2022, prices were hovering at, or more than, 10 per cent.
When you add record profits made by grocery retailers during the same period, it all starts to make sense. If grocery stores were simply passing on higher costs to consumers, then food prices would have risen at roughly the same rate. But they didn’t; food prices went up a lot more than a many other goods and services.
Poilievre and the Tories don’t want to hear it, but opportunistic and even predatory pricing by grocery chains — and other retailers and manufacturers — is really behind the level of inflation we just experienced. It was greed, driven by a unique intersection of factors, that opened a floodgate of inflation that had been closed for decades.
Tiff Macklem, the governor of the Bank of Canada, said in a recent interview with the Free Press that opportunistic or artificial inflation was a huge driving force in the affordability crisis.
Macklem said that inflation had been very “low and stable” for more than 30 years when the pandemic, crippled supply chains, the war in Ukraine and skyrocketing oil prices combined to create upward pressure on prices. All those forces did create legitimate inflation, but the people who make and sell goods and services also sensed that a window was opening.
“When everybody’s raising their prices, and you’re the consumer, there’s nowhere to go,” Macklem said. “We could see this in the data; the frequency and size of price increases across many sectors of the economy went up considerably when inflation went up (because) companies weren’t feeling that competitive pressure to not increase their prices.”
One final note about opportunistic inflation and politics. The federal NDP has been hammering away at Poilievre’s close ties to the retail industry, in general, and the grocery industry, in particular.
The allegation centres on Jenni Byrne, a top Tory strategist who owns a consultancy that is a registered lobbyist for — wait for it — Loblaw.
Let’s be clear: the Tories are trying to blame the Liberals for inflation because it has proven to be a potent political strategy. Poilievre continues to point an accusing finger, and Canadians are blaming the Liberals.
But at some point, Poilievre’s (overpriced) bread-and-circus strategy will wear thin. And people will begin to see the real causes of inflation.
dan.lett@winnipegfreepress.com
Dan Lett
Columnist
Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986. Read more about Dan.
Dan’s columns are built on facts and reactions, but offer his personal views through arguments and analysis. The Free Press’ editing team reviews Dan’s columns before they are posted online or published in print — part of the our tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.
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