Households in Canada should prepare for a significant increase in food expenses next year. A recent report forecasts that an average family of four will spend approximately $994.63 more on groceries in 2026, bringing their total food bill to an estimated $17,571.79. This increase is attributed to a projected inflation rate of 4 to 6 percent for food, which is higher than the roughly 4 percent inflation rate observed this year.

The report, produced by the agri-food analytics lab at Dalhousie University in collaboration with several other universities, indicates that food prices will take up a larger share of household budgets. This rise in food costs is expected despite a general decline in the overall inflation rate, which is anticipated to fall to the Bank of Canada’s target of 2 percent.

Lead author Sylvain Charlebois noted that while trade-related price pressures are easing, geopolitical factors remain uncertain. "Geopolitics will remain an unknown into 2026, but we are expecting tariffs not to be as much of an issue in 2026 than in 2025, which is good news," he said. Canada recently lifted most counter-tariffs against the U.S., and U.S. tariffs on over 200 agricultural products have also been reduced.

Despite these changes, the report highlights that the costs associated with supply chain investments and diversifying trade partners continue to contribute to rising food prices. Charlebois expressed some initial concern about the impact of the buy Canadian movement, which could lead to higher costs if grocers had to source products from more expensive markets. However, he acknowledged that grocers have successfully found affordable alternatives.

The report also notes that while vegetable prices decreased by 0.9 percent and fruit prices fell by 1.1 percent this year, this trend is not expected to continue. Fruit prices are projected to rise by 1 to 3 percent, and vegetable prices are expected to increase by 3 to 5 percent next year. Meat prices are a significant driver of food inflation, having risen by 7.2 percent this year, with projections of an additional 5 to 7 percent increase in 2026. This surge is linked to the smallest cattle herds in Canada since 1988 and rising feed costs due to drought conditions.

Charlebois remarked, "The beef situation is problematic. I honestly do not understand why Ottawa is not looking into this." He suggested that the government should consider increasing beef imports from countries like Australia to alleviate pressure on prices. As beef prices rise, consumers are shifting to chicken, which is also seeing price increases, although adjustments to chicken flock sizes can be made more quickly than to cattle herds.

Climate change is another factor affecting food prices, according to Sadaf Mollaei, an adviser to the report. She stated, "Climate change has a very significant effect on prices, and it will most likely increase the prices because of these severe climate situations that we see in places where food is produced." Weather-related issues have already impacted the prices of various imports, including coffee, tea, and several fruits and vegetables.

Looking ahead, seafood prices are expected to rise by 1 to 2 percent, while dairy and egg prices may increase by 2 to 4 percent. Restaurant prices are also projected to rise by 4 to 6 percent. Additionally, the Canada Grocery Code, set to launch in January, may influence pricing dynamics. Charlebois believes that this code could help balance the power between grocers and suppliers, potentially leading to more stable prices for consumers. "Getting processors, vendors, and grocers to the table to negotiate in fairness, in good spirit, will eventually help consumers over time," he said.

Overall, 2026 is shaping up to be a pivotal year for food pricing in Canada, with various factors contributing to the anticipated increases.