Canada Food Prices Set to Rise $994 in 2026: Meat and Climate Drive 4%-6% Inflation

Expect food to consume a larger share of household budgets next year.

The latest Food Price Report, compiled by a group of Canadian universities, projects that the average Canadian family of four will pay an estimated $994.63 more for groceries in 2026 than this year. This sharp increase is attributed to persistent issues such as climate change and trade dynamics.

The total food bill is estimated to reach $17,571.79, based on a projected food inflation rate of four to six per cent for the coming year, according to the report produced by the agri-food analytics lab at Dalhousie University in collaboration with other institutions.

This projected inflation rate is higher than the approximately four per cent seen this year and is expected to outpace the overall inflation rate, which is forecasted to decline toward the Bank of Canada’s two per cent target.

Trade Pressure Eases, But Supply Costs Persist

Lead author Sylvain Charlebois indicated that food price growth is expected even as trade-related pressures continue to ease.

“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 lifted almost all counter-tariffs against the U.S. in September, and recently, U.S. President Donald Trump walked back tariffs on over 200 agricultural and food products. These U.S. tariffs, which included a 50% levy on Brazilian coffee, had been exerting upward pressure on Canadian prices for goods either transiting through the U.S. or feeling a knock-on effect.

Charlebois noted that long shelf-life products like coffee will likely see a slower price decline compared to items like bananas, on which U.S. tariffs have also been removed.

While trade disputes are lessening, the necessary investments companies are making in optimizing supply chains and diversifying trade partners are still generating higher costs, although Charlebois believes grocers managed to find affordable new sources, mitigating the worst fears. This effort may be reflected in this year’s price declines for vegetables (-0.9%) and fruit (-1.1%).

Meat, Drought, and Climate Change

The report forecasts that the downward trend will not hold, with fruit prices possibly rising one to three per cent and vegetables expected to climb three to five per cent next year.

Meat is identified as the primary driver of food inflation, having risen 7.2% this year and projected to increase another five to seven per cent next year. Prices are surging because cattle herds were at their smallest level since 1988 this past January. Drought has increased feed costs, while packing and processing costs are also rising.

Sadaf Mollaei, an advisor to the report and Arrell chair in the business of food at the University of Guelph, linked the droughts pushing up beef prices to the broader issue of climate change, which continues to disrupt global food systems. “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,” she stated.

Other Categories and Regulatory Outlook

• Seafood prices are expected to rise modestly (one to two per cent), while dairy and eggs could see a two to four per cent increase.

• Restaurant prices are projected to rise by four to six per cent.

A key element to watch in 2026 is the impact of the Canada Grocery Code, which formally launches its operations in January. Charlebois suggested that this code of conduct could help curb the power grocers hold over suppliers, potentially leading to greater price stability for consumers over time.