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Buying groceries, gas? Dig deeper to pay for it

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The combination of rising demand from post-recession global economic growth and unrest in the oil-sensitive Middle East is driving up prices across the board for businesses and consumers.

It looks like everything from a loaf of bread to topping up the tank at the gas pump to an airplane ticket to just about anywhere could be going up.

Last week, George Weston, parent company of Superstore, said it will mark up prices on many bakery items by about five per cent on April 1.

In January, University of Guelph agricultural economist Sylvain Charlebois was forecasting food-price increases of three to five per cent this year.

He's already bumped up that scenario to five to seven per cent.

"We have gone up to another bracket," he said. "There is much uncertainty. I would not be surprised if that is revised up again. There are some people talking about $200 per barrel oil. That is a scary thought, but everything is on the table now."


Oil prices may have slipped ever so slightly Tuesday -- down 42 cents to US $105.02 on the New York Mercantile Exchange -- but there is no one who believes the trend in oil prices is going anywhere but up.

-- Some economists say oil at $125 a barrel would cause economic growth projections to be rewritten and at $150 it would crush economic growth. In an article last week in the Huffington Post, former CIBC chief economist Jeffrey Rubin said oil was already at triple digits before political unrest began in the Middle East and "it isn't hard to find a path to $200 per barrel oil."

-- Prairie agricultural commodities like wheat, canola, soy and barley are all on the way up. The price of wheat has almost doubled in the last few months and in addition to figuring out how to pay for fertilizer -- which is going up largely because of demand -- the big decision for farmers will be which crops will give them the biggest bang for their bucks.

-- Many farmers may have already purchased enough fuel for seeding, but spiking fuel costs at harvest -- where some farms can consume as much as 5,000 litres a day -- could cancel out gains made on grain-price increases.

At the pump

The average price in the city on Tuesday was $116.49, a price that has to be getting close to the point where motorists might start second-guessing their driving decisions.

-- Diesel-fuel prices have gone up about 17 per cent since the end of last year to $1.15 a litre. Bob Dolyniuk of the Manitoba Trucking Association said many carriers would have increased fuel surcharges three or four times since then. He said if prices get back up to the $1.44 range they hit in 2008, it won't be uncommon to see fuel surcharges of 40 to 50 per cent of the shipping bill.

In the air

The U.S. airline industry has been steadily increasing fares all year because of fuel prices that have shot up by about 50 per cent over the last year. CEO Rick Seaney was quoted in a recent Associated Press article saying leisure travellers in the United States may now have to pay $260 for a ticket that cost $200 back on Jan. 1.

-- This week, Air Canada announced a $10, one-way fuel surcharge on trips to the U.S.

-- In Manitoba, Michael Rodyniuk, chief operating office of Exchange Income Corp., owners of Perimeter Aviation, Keewatin Air, Calm Air and Bearskin Airlines, said jet-fuel prices have gone up by 25 per cent since January. "We are most probably looking as though we will have to make a similar adjustment (fuel surcharges) to our fares."

At the till

With fierce competition in the grocery store business, every player is loath to increase their prices, but clearly the resolve to keep prices down is faltering.

-- On Tuesday, Bill McEwan, CEO of Sobey's, Canada's second-largest grocer, said, "There's enough early indications to suggest the market is prepared to move up in a responsible way to reflect justified cost increases as manufacturers bring them forward."

-- Meat and baked-goods maker Maple Leaf Foods says it will raise its fresh-bakery prices by 20 cents a unit at the end of March as it battles rising prices for the flour used in bread, and pork, beef and chicken used in deli meats and hotdogs.

-- Last week, hog industry experts in Winnipeg said soaring feed costs are expected to drive up retail pork prices by at least 10 to 15 per cent this year, with chicken prices also going up and beef possibly even more.

-- With files from Canadian Press

Republished from the Winnipeg Free Press print edition March 9, 2011 B5

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