Good morning. Food inflation is driving a nation of bargain-hunters, even as the pace of price growth steadies across the board. In focus today, we look at why the big grocers are just fine with that \u2013 for now.<\/p>\n
Up firstIn the news<\/p>\n
Tumbler Ridge: Ottawa has summoned<\/a> safety chiefs from OpenAI for a deeper explanation of why the shooter\u2019s concerning comments on ChatGPT were not reported to police.<\/p>\n Travel: After putting a damper on visits to the United States, the Trump administration\u2019s policies are now also upending Canadians\u2019 winter travel to favourite sun destinations<\/a>.<\/p>\n Tech: A renewed slump in technology companies\u2019 shares underscores continued concern<\/a> about potential market disruptions caused by the expanding use of artificial intelligence.<\/p>\n Open this photo in gallery:<\/a><\/p>\n A No Frills in Toronto.Chris Young\/The Canadian Press<\/p>\n In focus<\/p>\n Putting our money where our mouths are<\/p>\n Talking about food prices is becoming more popular than talking about the weather. And it\u2019s no wonder: The price of food in grocery stores was more than 7 per cent higher than a year ago in January, double the food inflation rate six months ago. <\/p>\n It doesn\u2019t help that Canada has the highest rate<\/a> of food inflation in the G7 countries. Not the podium we want to own.<\/p>\n Gloom, no doom<\/p>\n You might expect those stubbornly high prices to act as a deterrent to price-conscious consumers \u2013 and for companies such as Loblaw Cos. Ltd., which reports quarterly earnings tomorrow, to be weighed down by slower foot traffic.<\/p>\n But while consumer sentiment is low, shoppers haven\u2019t stopped spending \u2013 they\u2019ve simply changed how and where they do it. Many are shifting more of their budgets toward private\u2011label products and lower\u2011priced retailers. Loblaw\u2019s discount banners \u2013 No Frills, Maxi and Real Canadian Superstore \u2013 outperformed<\/a> its traditional supermarkets last quarter, and the company has continued its push into the discount space in the months since.<\/p>\n The disconnect between sentiment and spending can largely be chalked up to the COVID-19-spurred \u201conce-in-a-generation inflation,\u201d Bank of Nova Scotia analysts wrote in a client note last month. Consumers in Canada and the U.S. are still feeling the sting of that spike, and \u201cthe mantra of affordability\u201d among politicians looks likely to continue to influence consumers.<\/p>\n And hey, have you tried to make a coffee-rub for your steak recently? The price of beef (up 18.8 per cent in January from the year before) and java (up 29.8 per cent) are both bananas. (Don\u2019t get me started.)<\/p>\n There are signs of daylight: Outside of food and shelter, the prices of items such as clothing and household goods have generally risen more slowly than wages. That slower rise offers little comfort at the grocery store, but it does help offset the squeeze.<\/p>\n Wages and disposable income, meanwhile, are steady. And the unemployment rate has been shrinking, the analysts noted. \u201cThe net result is the same: Worried consumers keep spending, and we don\u2019t see that changing in 2026.\u201d<\/p>\n In fact, shoppers might be finding even more places to source their produce. <\/p>\n Value-seeking, eco-conscious consumers are driving the rise of liquidation-style surplus stores, which sell near-expiry date, mislabeled or cosmetically imperfect products. Dozens of independent stores across the country are predicting more openings this year.<\/p>\n Loblaw, along with grocery providers Metro Inc. and Empire Co. Ltd., are all attempting to channel this new model through \u201cfood-rescue\u201d partnerships \u2013 Loblaw with \u201cFlashfood,\u201d Metro with \u201cToo Good to Go,\u201d and Empire\u2019s \u201cFoodHero\u201d \u2013 but they aren\u2019t designed in the same way as liquidators, which can offer lower prices and don\u2019t need to carry a consistent stock of products.<\/p>\n Marie-\u00c8ve Breton, owner of Quebec-based Liquidation Marie, told Canadian Grocer<\/a> this month that her customer base has shifted dramatically in recent years \u2013 from budget-conscious shoppers to \u201ceverybody.\u201d Breton plans to open 10 more stores in Quebec this year.<\/p>\n \u201cThey come because they see it\u2019s the same thing.\u201d <\/p>\n And they come because they can\u2019t find bargains in their monthly shelter payments. Dr. Yu Ma, a marketing professor at McGill University, told the CBC<\/a> that food is the easiest thing to cut for families living paycheque to paycheque. <\/p>\n \u201cYou cannot cut power, you cannot cut rent or mortgage payments.\u201d<\/p>\n These stores aren\u2019t a threat to the big chains \u2013 in fact, they might complement each other \u2013 but they show just how active shoppers are becoming in stretching their money. <\/p>\n Yesterday, Loblaw announced plans <\/a>to spend $2.4-billion this year to expand its presence across Canada, renovating 191 stores and opening 70 new ones. Of those, 31 will be No Frills and Maxi stores \u2013 a big bet on consumers who are bent on spending less.<\/p>\n ChartedThey snooze, we lose<\/p>\n On the occasional days of the year when U.S. markets close up shop for holidays while traders in Canada keep working, the Toronto Stock Exchange can feel listless. That\u2019s because, increasingly, it is<\/a>.<\/p>\n Quoted<\/p>\n Everybody\u2019s got a past. Mine\u2019s still haunting me.<\/p>\n U.S. country star Charley Crocket has cancelled<\/a> his Canadian tour after being refused entry. In 2014, Crockett was arrested in Virginia for felony possession and trafficking of marijuana.<\/p>\n Up nextMore files we\u2019re following<\/p>\n Before the bell: Scotiabank kicks off earnings week for the Big Six. Home Depot Inc. reports south of the border, but markets are still trying to make sense<\/a> of computers.<\/p>\n Before the breakups: Trump warns countries against backing out<\/a> of trade deals after the Supreme Court ruling, and vows to use tariffs \u201cin a much more powerful and obnoxious way.\u201d<\/p>\n Before you go: Thousands of Canadians in the Puerto Vallarta region were directed by Ottawa to shelter in place<\/a> after the death of a cartel leader in Mexico prompted a violent outbreak. On Monday evening, some airlines said they would resume service<\/a> to parts of the country starting Tuesday.<\/p>\n Morning update<\/p>\n