We knew that prices were about to change at Canadian grocery store chain Loblaw (TSE:L) as pre-tariff stores ran low and new orders at higher prices would have to be placed. But as it turned out, new reports noted that this was the third straight month that Canadian grocery prices have actually grown faster than the overall rate of inflation. That proved little problem for investors, though, as shares were up modestly in Tuesday afternoon’s trading.
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The word from Statistics Canada told us what every Canadian who eats food and gets it at Loblaw already knew: grocery prices are up, again. And while the overall pace of inflation has been cooling off in Canada, grocery prices are going up, and faster. Back in March, food prices increased 3.2% against what they were in March 2024. For April, prices grew once more, and higher, too. Prices were now 3.8% higher than they were in April 2024.
For reference, the overall inflation rate in Canada was 1.7% for April, which meant food prices grew more than twice as fast as overall inflation. Some prices, naturally, rose much more than others. Fresh vegetables saw modest increases at 3.7%, while coffee and tea surged 13.4%. One of the highest gains came from fresh or frozen beef, which blasted up 16.2%.
Opportunistic, or Just True?
Meanwhile, Canadians grow increasingly irked by Loblaw’s use of “T” labels, labels designed to denote food and other items impacted by tariff. Loblaw, of course, calls it a way to bring “clarity” to the increasing prices. But one expert notes that it is a “puzzling” way to address growing consumer outrage at prices that are seemingly surging for no good reason.
In fact, many Canadian shoppers are taking to Reddit (RDDT) to detail their displeasure at Loblaw’s price policies. “Everything has been jacked up, with very few tariff symbols being used.” Another remark noted “(Loblaws) is clearly opportunistically gouging Canadians under the general guise that we either won’t notice or will expect higher prices during this geopolitical climate.”
Is Loblaw a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on TSE:L stock based on six Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 40.76% rally in its share price over the past year, the average TSE:L price target of C$236.93 per share implies 6.24% upside potential.
