Grocers under growing political pressure as NDP pushes for investigation of ‘profit-driven inflation’

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A New Democratic Party member of Parliament wants to summon grocery executives to the House of Commons to explain why Canada’s biggest supermarket chains are growing profits at a time when food inflation is rising at its fastest pace in decades.

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Alistair MacGregor, who represents a riding that covers the southern portion of Vancouver Island, advised the House agriculture committee on Wednesday evening that he intends to table a motion that the committee investigate “profit-driven inflation” in the grocery business, setting the stage for a vote as early as next week.

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MacGregor is the only NDP lawmaker on the committee and it was unclear whether he’ll be able to muster enough support from other parties to pass his motion. The 12-member committee consists of seven Liberals, including chair Kody Blois, three Conservatives, MacGregor and Yves Perron of the Bloc Quebecois.

Regardless of the outcome, MacGregor’s motion is further evidence of a growing public relations problem for Canada’s big grocers, as economists, consumer advocates and the NDP have all publicly questioned whether profiteering or price gouging is driving profit growth in the sector.

Federal NDP leader Jagmeet Singh has emerged as one of the most vocal critics of the grocery business, criticizing a top grocery CEO on Twitter and blaming “corporate greed” for the fastest food inflation in four decades.

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The top three grocers — Loblaw Cos. Ltd., Sobeys’ parent Empire Co. Ltd., and Quebec-based Metro Inc. — say higher profits and wider profit margins are coming from other factors and have nothing to do with the broader inflation story. For example, all say they are benefiting from increased demand for high-margin health and beauty products, now that pandemic restrictions have been lifted and people are going back to offices and parties.

But accounting experts say it’s difficult to figure out whether those explanations are true using just the data included in public financial statements, leading to calls for a public inquiry into grocery profits.

“If we really want to get to the bottom of it, there needs to be some objective, third-party analysis,” said Robin Shaban, a former officer at the Competition Bureau and co-founder of a think-tank called the Canadian Anti-Monopoly Project. “There’s a lot of limits to what can be done with what’s publicly available.”

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MacGregor’s formal notice of motion called on the committee to “examine record profits of large grocery chains and their CEOs in relation to employee wages and the cost of groceries in Canada.” MacGregor also wants the investigation to look at the grocery oligopoly’s ability to use its dominance to “cut into the earnings of Canadian farmers.” The investigation would invite witnesses including grocery CEOs, unions and farmers, according to the notice of motion.

“I think that all political parties have been feeling the heat on this,” MacGregor said in an interview on Thursday. “Many of my constituents are banging down my door talking about the high cost of groceries.”

But John Barlow, the Conservative agriculture critic and one the committee’s vice-chairs, said he believes such an investigation into competition and wage issues would be better suited for the House of Commons committee on industry, which has previously studied power imbalance issues in the grocery sector.

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“We’re going to try to make some amendments,” Barlow said. “I think he’s missing some things here and the way this motion is worded, I think, would be much better at industry committee, because he’s talking about competition, wages — that’s not really the mandate of the agriculture committee.”

Barlow said he’d be “more open” to an investigation if MacGregor refocused the motion to look at rising input costs at the farm level, including fertilizer prices and the impact of the Trudeau government’s carbon tax.

Many of my constituents are banging down my door talking about the high cost of groceries

Alistair MacGregor, MP

Federal Agriculture Minister Marie-Claude Bibeau wouldn’t say whether she supports a closer look at the grocery industry.

“The committee can make their own choice in terms of the studies they want to pursue,” she said at a news conference on Wednesday. “We are all worried with the price of food, of course. And I will let them make their decision in terms of their priorities.”

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Grocery leaders have dismissed the scrutiny on profits as unfounded and misguided. Karl Littler, senior vice-president at the lobby group Retail Council of Canada, told the House of Commons finance committee on Wednesday that the criticism around profit growth in the sector shows that few people in Canada understand how inflation works.

“We here in Canada have little contemporary experience with inflation, which has been at historic lows for over 30 years,” said Littler, whose organization represents the big grocers. “And one problem with this lack of modern experience is that some commentators are rushing to judgment or seeking to play the blame game for their own purposes.”

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And earlier this month, Empire chief executive Michael Medline called out the ongoing controversy in a speech at his company’s annual general meeting.

“Quite frankly, I am tired of these armchair quarterbacks who make little effort to understand even the basics of our business but are comfortable sitting on the sidelines pontificating about how Canadian companies are reaping unreasonable profits on the backs of inflation,” he said.

That caught the attention of the NDP’s leader, who complained on Twitter that Medline’s $8.65-million total compensation in 2022 represented a 15 per cent raise over 2021. “Did workers at his stores get a 15 per cent raise? No. Instead, he took away their hero pay during the pandemic,” Singh said, referencing the June 2020 scandal that pushed Ottawa to change federal protections for workers against wage fixing.

In its last financial update, Empire reported net income of $187.5 million in its most recent quarter, little changed from a year earlier. Meanwhile, Loblaw grew profits to $566 million on an adjusted basis in its most recent quarter, up 22 per cent over last year. And Metro reported quarterly profit of $275 million, up nine per cent.

All three companies did not answer questions on Thursday about whether their chief executives would participate in a House of Commons committee hearing on grocery profits.

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