Inflation pressures hurt Canadian food manufacturer margins

Inflation of materials and labour costs put pressure on all sectors in the food manufacturing industry.

The consequence of higher commodity prices caused by war and drought have driven food manufacturer’s gross margins to the lowest level in 20 years, says a report by Steve Baruk, economist with Farm Credit Canada.

Higher food prices last year caused Canadians to spend their savings built up during the previous two years of pandemic.

“The labour market tightened as businesses looked to boost production… causing unemployment to reach record lows and increasing wages,’’ Baruk said.

Repeated interest rate increases by the Bank of Canada added pressure on gross margins.