Loblaw's decision to freeze prices on all No Name items until January labelled a 'PR strategy'

Canada's biggest grocery chain is freezing prices on all its No Name products for the next three months.

Loblaw Companies Ltd. — which operates such grocery stores as Loblaws, Zehrs, No Frills and Real Canadian Superstore — says it has locked in prices of the popular house brand, which includes more than 1,500 grocery items, until Jan. 31, 2023.

In a letter shared with some of its customers on Monday, Loblaw chairman and president Galen G. Weston says the price of an average basket of groceries is up about 10 per cent this year, with such items as apples, soup and chips up even more.

Weston said much of this is "maddeningly" out of the company's control as food suppliers pass on higher costs to Loblaw.

The chain has pushed back against some increases where it can, he said, but suppliers are contending with the same cost increases faced by consumers — with higher prices for everything from raw materials to energy and transportation.

"None of these explanations offer much comfort when you're worried about your family's budget and uncertain about how much you'll need each month to pay for food," Weston said in a letter to members of the company's loyalty program, PC Optimum.

Last year, a fight over higher prices briefly saw the company suspend the sale of Frito-Lay products at its stores, before the two sides came to an agreement.

Grocery chains have come under fire for being seen to be making excessive profits at a time when consumers are stretched thin due to rising inflation.

A few years ago, grocery chains including Loblaw, Sobeys, Metro and others took a reputational hit with shoppers when they were found by Canada's competition watchdog to have been colluding to fix the price of bread and other baked goods for years.

Federal NDP Leader Jagmeet Singh has made grocery store profits a rallying call, noting that the major Canadian chains have taken in $2.3 billion in profit so far this year.

Loblaw's profits have indeed risen of late, with the company revealing net earnings of $387 million in its most recently completed quarter. That's up by $12 million from this time last year and by $121 million from the same period in 2019, before the COVID-19 pandemic.

At rival Metro Inc., net earnings came in at $275 million in the most recent quarter, up from $252 million a year ago and $222 million in the same period in 2019.

It's a similar trend at Empire Co., the owner of Sobeys, which posted net earnings of $187 million in its most recently completed quarter. That was down slightly from $188 million in the same period a year earlier but up from $120 million in the same period pre-pandemic.

Jim Stanford, an economist and director of the research institute Centre for Future Work, said while many Canadian corporations have tried to paint themselves as the victims of inflation, their financial results show that they are in fact contributing to it.