After two years of rising consumer spending, there are signs of a descent on the horizon, notes a report from Canada Beef.
Between the second quarters of 2020 and 2022, consumer spending stepped up 23 per cent, the Domestic Market Report notes. That momentum has spurred positive national economic growth over the last two years, the report adds. Canadian food expenditure increased 11 per cent from the fourth quarter of 2019 to peak in the first quarter of 2021 but has since declined eight per cent into the second quarter of 2022 (2012 constant terms). Canadians are deciding to consume less at current price levels, and food expenditures are shrinking as a result.
Canadian retail beef prices remained strong in July 2022, with value product prices moving higher. Ground beef and stew meat prices increased by double digits. Switching to more affordable products and discount retailers are proven strategies for consumers during inflationary periods. This is true now for wealthier segments of the population as it was for lower-income families squeezed earlier this year. While still historically strong, total supermarket and grocery sales declined 0.7 per cent from May to June and a further 0.9 per cent from June to July 2022.
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Rib prices at wholesale remained steady for the summer, but loin prices declined dramatically, pressuring the cutout value compared to recent years. The U.S. composite cutout (as of Sept. 16, 2022) at CDN$338/cwt (US$264/cwt) was still resilient, but lower compared to CDN$344/cwt (US$276/cwt) at the same time last year.
Food service sales are positive and steady, with traffic nearly returning volumes from 2019 by the second quarter of 2022. However, the food service sector faces headwinds in staffing and margins. Casual dining is likely to surge ahead in 2022 whereas demand for high-end restaurants could ease. Beef import values increased substantially from January to July in 2022 with volumes steady with 2021, reflecting the tightening of global beef supplies. Year-to-date volumes declined from the US (-1 per cent) and increased from Australia (+43 per cent), showing a reverse trend in suppliers.
