Household food inflation in Canada

Abstract

We study household‐level food inflation rates during low‐inflation, pandemic and postpandemic inflation surge periods using Canadian homescan data for 2012Q4–2023Q4. Our results about household inflation rates during low inflation are consistent with evidence for the United States (Kaplan and Schulhofer‐Wohl 2017). During the postpandemic inflation surge, we find that the dispersion in household‐level inflation rates increased and that the correlation between household‐level inflation rates and aggregate inflation became stronger. Households shopping more frequently, shopping at more stores or buying more on sale experienced lower food inflation, and households relied more on these strategies to lower their inflation in the high‐inflation period. Consumers substituted more toward lower‐priced products with the postpandemic increase in inflation. Lower‐income households experienced higher food inflation rates. These findings have implications for the welfare costs of inflation.