Canada’s Grocery Rebate gets under way

The Canadian government has launched the Grocery Rebate relief program, aimed at helping consumers and families in need buy food as they grapple with elevated prices.

Under the initiative, unveiled in late March and signed into law in May, 11 million lower-income Canadians and households will receive $2.5 billion (Canadian) in targeted funding via one-time payments. The Canada Revenue Agency began delivery of the funds, by direct deposit or check, on Wednesday.

On average, the Grocery Rebate will give eligible couples with two children up to $467 extra, and individuals without children would get up to another $234. Seniors also would get an extra $225, on average.

Chrystia Freeland, deputy prime minister and finance minister for Canada, announced the Grocery Rebate rollout on Wednesday. The program is part of the Cost of Living Act No. 3  (Bill C-46) legislation within Canada’s 2023 budget.

“While inflation in Canada has fallen to 3.4% in May—down from 4.4% in April and from a high of 8.1% last June—rising grocery prices remain a challenge for too many Canadians,” Freeland said in a statement. “With the Grocery Rebate payments being delivered to 11 million low- and modest-income Canadians starting today, our government is continuing to provide inflation relief to Canadians who need it most.”

Eligible Canadians don’t need to apply for the Grocery Rebate, which will be delivered with the July Goods and Services Tax (GST) Credit payment, but must file their 2021 tax return to receive the benefit. The GST is tax-free quarterly payment that helps individuals and families with low to modest incomes offset the taxes they pay on goods and services purchases.

Consumers receiving the Grocery Rebate will get a sizable one-time boost in relief. For example, a single mother with one child and $30,000 in net income would receive $386.50 on top of the $821 she would get through the GST Credit. Meanwhile, a couple with two children and $35,000 in net income would get a Grocery Rebate of $467 in addition to $992 from the GST Credit. A single senior with $20,000 in net income would receive $233.50, along with $496 from the GST Credit.

In announcing the Grocery Rebate’s launch, Freeland reported that, among G7 nations, the only country with inflation lower than Canada in May was Japan, at 3.2%. Still, she noted, many Canadian consumers have been feeling the squeeze of higher food pricing at the grocery store.

The result has been increased public skepticism of grocery retailers and manufacturers. Last fall, the Canadian House of Commons’ Standing Committee on Agriculture and Agri-Food voted to undertake an in-depth study on escalating inflation in the food supply chain, surging grocery prices and possible profiteering by big supermarket chains. In large part, the probe arose from suspicions that grocery companies might be using high inflation to cloak price hikes.

In March, the heads of Canada’s big-three grocers—Galen Weston of Loblaw Cos., Michael Medline of Sobeys (Empire Co. Ltd.) and Eric La Fleche of Metro—were grilled about potential grocery price gouging in a parliamentary committee hearing. Also that month, market researcher Mintel released survey findings that 83% of Canadian grocery shoppers believed grocery retailers and food producers were engaged in “greedflation,” or using inflation as an excuse to price-gouge. Seventy-three percent of respondents agreed the pace of food price increases has given them added stress, and 76% said they feel “trapped” by the fact that no matter how much food prices climb, they have to absorb them.

High food prices, too, have prompted Canada’s Competition Bureau to investigate grocery retailers’ market power. The agency’s “Canada Needs More Grocery Competition” study, released in late June, concluded that the nation’s grocery retail industry is too concentrated and all levels of government must find ways to foster competition.