There is no evidence to suggest that retailers have profited from inflation, according to a statement by the Bank of Canada (BoC) on Tuesday.. Bank of Canada .NDP leader Jagmeet Singh disagreed with the BoC's conclusion. .According to Blacklock’s Reporter, Singh referred to data from another federal agency contradicting the findings..“Our estimates suggest markup growth accounted for less than one-tenth of inflation in 2021,” said a BoC report. .“Furthermore, by 2022, when inflation reached its highest levels in recent years, growth in markups was near zero or negative.”.“Counter to what we would expect if firms were using their market power to raise prices, increases in the markups of Canadian firms do not coincide with the high inflation in 2021 and 2022,” said the report The Contribution of Firm Profits to the Recent Rise in Inflation. .“Rather, the data suggest the contribution of changes in markups to inflation was limited.”.“Markups did grow after the onset of the COVID-19 pandemic,” wrote the BoC..“However, our results do not indicate this markup growth was inflationary. Most of the growth in markups occurred in 2020, a year characterized by low inflation.”.Bank figures were calculated by taking broad averages across various sectors. .On Tuesday, Singh pointed out that a review conducted by the Competition Bureau (CB) of grocery chains did reveal higher profit margins for these companies..“We know this is a fact,” said Singh..“I can’t imagine how families are coping with not only the cost of grocery prices going up but, on top of that, the price of everything going up. What makes it all so much worse is we have these corporate grocery stores that are posting record profits that are gouging Canadians.”.“Large corporate grocery stores have made record profits,” said Singh. .“Not just any old profits but record profits. They are making more money than they have ever made before.”.In a June 27 report, the CB stated that large grocers had increased their profit margins by “modest yet meaningful” amounts, which could be as much as $1 billion annually..“Margins generally increased by one or two percentage points since 2017,” said the CB..“Grocers make relatively little on each item but make their profits in volume. That means even small changes in margins can be meaningful.”.According to the CB report Grocery Competition, the combined profits for the three largest grocery chains — Loblaw Companies, Metro and Sobeys Incorporated — since 2019 increased from $2.4 billion to $3.6 billion..“Based on the information we were provided by Canada’s grocery giants, we found Canadian grocers’ food gross margins have generally increased over the last five years by a modest yet meaningful amount,” said the report..“This longer-term trend predates the supply chain disruptions faced during the pandemic and the current inflationary period.”
