Canada’s inflation rate slowed to 6.3 per cent in December (the lowest it’s been since February 2022), with the cost of living declining 0.6 per cent in November and December. According to reports, the reduced rates are directly related to lower gasoline prices, resulting in December’s lowest one-month dip since April 2020.
Food prices, however, continue to climb, increasing 11 per cent so far with the cost of fresh vegetables up 13.6 per cent year over year. Will these continued increases affect consumer spending in restaurants and off-premise dining? A survey released by the Bank of Canada suggests that consumers are being cautious about their discretionary spending, despite the lower inflation rate.
According to Kelly Higginson, chief operating officer at Restaurants Canada, restaurant bills are expected to continue to go up, reportedly by another four to six per cent. Many restaurants have tried to hold back on passing those higher costs onto their customers, but “inevitably, they’re going to have to raise their prices more to continue to try and cover some of the cost increases,” she says.
Higginson also suggests that we will see more and more restaurants slim down their menus, use more cost-effective ingredients, and try to maximize more affordable food items on their menus, along with adding automation to save on labour and recoup some of these costs.
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Higginson suggests that restaurants look to social media, apps, and reward programs as they try to encourage diners to visit. The struggle for the industry’s recovery continues s restaurants try and attract customers, manage their costs, and build their bottom lines, while food inflation persists into 2023.
