CHARLEBOIS: Weak dollar, expensive groceries

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Canada lost 68,000 jobs in September. Young people were particularly hard hit, and Quebec recorded the largest provincial decline. These losses follow the disappearance of 42,000 jobs in August, when Ontario bore more of the brunt. Month after month, the data show that the labour market is faltering.

In fact, Canada’s labour market has 41,200 fewer workers than it did at the beginning of 2026. Meanwhile, the American economy has added 595,000 jobs. That is very little by American standards. So imagine what our record means for Canada.

Following the labour market results, the Canadian dollar slipped to around US$0.70, its lowest level since the spring of 2025. No one really knows where it is heading, but with bad economic news piling up, our dollar could plausibly fall further in the coming weeks. With winter approaching, that does not bode well.

Over six months, Canadian imports of agri-food and seafood products amount to roughly C$38 billion, estimated from the annual total for 2024. That figure illustrates the scale of the money involved; it is not a confirmed total for the November-to-April period. Fresh fruits and vegetables are, of course, particularly exposed to a weak dollar during the winter. Their main import season runs from November through June.

According to our scenarios, if the dollar falls to US$0.68, fruit inflation could reach 4.0%, while vegetable inflation could reach 5.5%. At US$0.65, just a few cents lower, those rates could reach 4.6% and 6.5%, respectively, all else being equal. Historically, vegetables have been much more exposed to currency fluctuations than fruits.

Much of this trade is conducted in U.S. dollars, regardless of where the products originate.

El Niño could drive up grocery bills

Mother Nature will also have a say in driving up our grocery bills.

The effects of the super El Niño are another concern. Global production is being disrupted by shifting weather patterns that bring too much water to some parts of the world and too little elsewhere. Coffee and cocoa are doing fine: prices are lower than last year. That is good news for coffee and chocolate lovers.

For other commodities, however, things have changed over the past year. Wheat prices are up 48.4%, and rice prices have risen 38.9%. Together, these two staples account for roughly 40% of the calories consumed worldwide. During the previous super El Niño, in 2015 and 2016, price increases emerged six to nine months later, partly because these two commodities drove up food processing costs. Soybeans are also up 29.7%, corn 21.4%, and sugar 17.1%. These are all important ingredients in the food supply chain.

The impact will not necessarily be comparable to what we saw in 2022, following Russia’s illegal invasion of Ukraine, when wheat reached US$13 a bushel. A few months later, food inflation hit 11%. Today, wheat is not even at US$7 a bushel. Higher input costs will therefore be a factor in 2027, but likely a less significant one than three or four years ago.

Even so, things are becoming more complicated for our agri-food sector. While geopolitics gives us headaches every day, our own anemic economy could also push up our grocery bills.

Certainly, we could produce more at home to reduce our vulnerability. That is part of the thinking behind Quebec’s food self-sufficiency strategy. Baby carrots processed in Quebec represent a small victory. Produits Frais FMS, based in Saint-Patrice-de-Sherrington, in the Montérégie region, markets them under the Carroté brand. The family business is run by brothers Marc-Olivier and Steven Daigneault. The carrots are cut, peeled and packaged in Quebec, although their origin may vary once local carrot supplies run out. It is a welcome step towards reducing our dependence on imports, supported by approximately $5 million in public funding. That is not a huge sum for a project that can make a real difference. We need more wins like this one.

Ottawa’s efforts are commendable as well. The government is working to strengthen Canadian food self-sufficiency through its National Food Security Strategy, which provides more than $3 billion over ten years, including $750 million to expand year-round fruit and vegetable production. The goal is to increase the share of healthy foods available in Canada that are produced domestically from 75% to 85% by 2032. By supporting greenhouses, processing and distribution infrastructure, Ottawa is taking encouraging steps to reduce our dependence on imports. Those commitments must now translate into lasting, competitive projects.

Over the long term, these decisions could change the outlook in our models, which show our vulnerability to macroeconomic fluctuations, particularly currency depreciation. This winter, however, that vulnerability will likely be measurable at the grocery checkout.

– Sylvain Charlebois is director of the Agri-Food Analytics Lab at Dalhousie University, co-host of The Food Professor Podcast

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