Other than baked good Canada has so far been able to breath easily when it comes to higher food costs. That will be changing in the coming months. With even the United States citizens worried enough to become hoarding basic staples the world is in the midst of global change.

The strength of the loonie compared to the declining US dollar has cushioned Canadians. Most commodities like grain, fuel and fertilizer are priced in U.S. dollars.

“But I don’t think Canada can escape the sort of food pass-through that has been going on in the global economy indefinitely,” says Derek Holt, vice-president at Scotia Capital Economics, who wrote the report.

“This is the year it starts to catch up to Canada. We’ve already started to see in some key categories and that will intensify in the summer months.”

In the past year global food prices have risen 57 percent. Rice prices have doubled during that time. As the costs creep into the Canadian marketplace spending habits will change drastically. There is a very real risk that Canadian by this summer will have to spend hundreds more than they are now a month for staples, heating and gasoline. This is not the time to be buying extra frills.

“That becomes a very dangerous scenario where you can have some sectors doing very well, food and energy, but other sectors see their pricing power totally evaporate,” Holt said.

Holt warns that food rationing could come into play in Canada.

Farmers have begun to switch to cash crops to take advantage of the food shortages. It will take at least three years though for the higher production levels to be seen within the nation.

Source: By Moments In Time