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“Food Price Will Increase in 2024”: CEO Metro
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Metro Inc.'s Approach to Navigating Inflation and Increase in Food Prices
In recent months, grocery inflation has shown signs of slowing down, moving towards more normalized levels. Metro Inc. reported a food basket inflation rate of about four percent for the quarter ending December 23, a decline from the previous 5.5 percent. This rate is notably lower than the general increases in the consumer price index for Quebec and Ontario, suggesting a positive trend in the grocery sector.
Despite this slowdown, consumers should still brace for price hikes in certain areas. La Flèche specifically mentioned orange juice as a product likely to see substantial price increases due to poor crop yields. While these increases may be inevitable, Metro Inc. remains committed to negotiating diligently with suppliers to mitigate impact on customers.
Changing Consumer Behaviors and Metro Inc.'s Financial Performance
The shift in consumer spending habits is a significant aspect of the current economic landscape. Many shoppers, facing tight budgets, are turning towards private-label products as a cost-saving measure. These products have not only reached record penetration levels but are also growing at twice the rate of overall food sales.
Metro Inc.’s financial performance in this environment is noteworthy. The company reported a slight 1.1 percent decrease in net income for the first quarter of 2024, amounting to $228.5 million. However, this was coupled with a 6.5 percent increase in revenue, reaching $4.97 billion. These figures reflect the complex balance between managing costs, consumer expectations, and maintaining profitability.
Looking Ahead: Price Adjustments and Competitive Landscape
As Metro Inc. concludes its three-month cost freeze, some retail price adjustments are inevitable. The company has experienced a significant reduction in the number of price-hike requests from suppliers compared to the previous year, indicating a stabilization in the market. However, La Flèche cautions that price adjustments, particularly in the mid-single-digit range, are likely for some products starting in February.
The competitive landscape of the grocery sector remains robust, with Metro Inc. facing competition from large multinational retailers. La Flèche emphasizes that the industry is highly competitive, countering any notion that market dynamics are stagnating. He warns: “food prices may increase in 2024″.
SOURCE: MONTEAL GAZETTE – Frédéric Tomesco
