Yahoo Finance Metro says it expects food price inflation to moderate as it books profit
Food prices have remained stubbornly high in Canada, outpacing the overall inflation rate
Metro Inc. (MRU.TO) says it expects food inflation to moderate going forward, as the company reported an increase in profit amid soaring grocery prices.
The Montreal-based grocery retailer says the pace and size of suppliers' cost increases have started to slow compared to 2022, when the company received 27,000 price increase requests with an average ask of more than 10 per cent. Metro has a blackout period between November and February where the company does not accept any cost increases. In January, CEO Eric La Flèche warned there would be cost increases coming.
"Compared to last year, the number of price increase requests received from suppliers in the month of February and March came down, as well as the size of those increases," La Flèche said on a conference call with analysts following the release of second-quarter results.
"While we are not able to predict how the current macro environment will evolve, we expect some moderation in food inflation."
However, La Flèche noted that while inflation "is hopefully going to moderate, it's still elevated versus normal inflation we used to have."
Food prices have remained stubbornly high in Canada, outpacing the overall rate of inflation. While data released on Tuesday showed that Canada's Consumer Price Index (CPI) slowed to 4.3 per cent in March, the cost of food purchased from grocery stores was up 9.7 per cent. Metro's internal food basket inflation figure, which is calculated differently than CPI, was 9 per cent in the second quarter.
The rise in food prices has pushed many of Metro's customers to its discount brands, such as Food Basics. The company expects the trend of customers favouring discount to continue amid a higher pricing environment.
Metro's profit in the 12-week period ending March 11 increased 10.4 per cent compared to last year, up from $198.1 million to $218.8 million, as sales jumped 6.6 per cent. Sales in the second quarter totalled $4.55 billion, up from $4.27 billion last year.
Canadian grocery retailers including Metro have been facing continued public pressure and scrutiny over increases in sales and profitability amid soaring food prices. La Flèche, who was one of three grocery chief executives to testify before a House of Commons committee as part of an investigation into food inflation, has said food inflation is a global phenomenon that has affected the entire supply chain.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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