Metro CEO Eric La Flèche says multiple factors that contribute to food inflation are out of the company's control and says it is negotiating with suppliers to minimize price increases.Andrej Ivanov/The Globe and Mail
The chief executive of one of Canada’s largest grocers says a proposed tax credit increase, designed to help lower-income Canadians cope with an affordability crisis and the rising cost of food, “is a good thing” – while also declaring that many of the factors driving food inflation are out of retailers’ control.
“We saw the announcement yesterday. Yes, a lot of families are under pressure,” Metro Inc. MRU-T CEO Eric La Flèche said during a press conference after the company’s annual general meeting on Tuesday, adding that food inflation has been a persistent concern. “I will not make any comment on the financial framework of the government, but providing help to people in need is a good thing.”
Historic spikes in food prices from 2021 to 2023 were a major shock to Canadian families. And food inflation has begun to accelerate recently, growing 5 per cent on an annual basis in December, nearly double the rate of general inflation, according to Statistics Canada. That follows a 4.7-per-cent increase in November.
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On Monday, Prime Minister Mark Carney announced a multibillion-dollar proposal to increase the GST credit paid to low- and moderate-income families. The credit will be renamed the Canada Groceries and Essentials Benefit, and Mr. Carney said that lower-income Canadians need the support because of rising food prices.
Metro is seeing cost inflation “week in, week out” for fresh foods, some of which the retailer does not pass on to consumers in the form of higher shelf prices, Mr. La Flèche said, “because it’s too much.”
But more price hikes are on the way, starting next week when the major grocers’ annual blackout period on price increases ends.
Multiple factors contribute to food inflation, including extreme weather that affects crops, higher transportation and labour costs, exchange rates that affect prices for imports, and geopolitical disruptions.
“A lot of it is out of our control,” Mr. La Flèche said, adding that the company is negotiating with suppliers to minimize price increases.
“It’s affecting our ability to promote, it’s affecting our ability to offer what we’d like to offer at a lower price,” he said. “But the costs keep going up, so we’re managing that as best we can, to provide value to Canadians every week. And we have to attract people to our stores.”
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Traffic to lower-priced stores is up, and shoppers are buying items on promotion more frequently. Metro is among the grocery giants that have been opening new discount stores, or converting existing stores to the lower-priced format, to compete for shoppers who have been scrambling to keep food costs under control. The company has opened 24 new discount locations over the past three years, and plans to open roughly a dozen more this year.
The company’s lower-priced Super C and Food Basics stores have been outpacing the sales growth at Metro’s conventional grocery chains, and contributing to the Montreal-based retailer winning some market share from competitors in its latest quarter.
On Tuesday, Metro reported first-quarter sales of $5.3-billion, up 3.3 per cent compared with the same period the previous year. The company also announced a 10-per-cent increase to its quarterly dividend paid to shareholders, to 41 cents a share.
Metro reported first-quarter sales of $5.3-billion on Tuesday, up 3.3 per cent compared with the same period in 2025.Christinne Muschi/The Canadian Press
Metro also reported that its own food basket inflation in the first quarter, which ended Dec. 20, 2025, fell below the rate measured by Statistics Canada’s consumer price index for food purchased from stores. The company’s internal metric tracks prices for a basket of goods frequently purchased at its stores, and is not directly comparable with CPI. Because it includes thousands of items, Mr. La Flèche said, that metric is “more precise” than Statscan’s.
He added that the grocery sector is “very competitive” and that the company is competing in a challenging environment.
Pressure on consumers has also dampened the “Buy Canadian” sentiment that surged last year, shortly after U.S. President Donald Trump imposed punishing new tariffs on certain Canadian imports. The demand for Canadian products continues to be elevated, Mr. La Flèche said, “but the value has to be there, and the price has to be right.”
As previously forecast, Metro’s first-quarter profits took a hit from a nearly two-month shutdown of its frozen-food distribution centre in Toronto, which began last September.
The company reported a 12.8-per-cent drop in net earnings during the first quarter ended Dec. 20, 2025, to $226.3-million or $1.05 in fully diluted net earnings per share, compared with $259.5-million or $1.16 a share in the same quarter the prior year.
The shutdown of the frozen-food distribution centre led to lost food products and repair costs, as well as added expenses for storing and shipping food at alternative locations. Those costs amounted to $15.9-million after tax in the first quarter. Taking that amount and other adjustments into account, adjusted net earnings grew by 1.3 per cent to $248.7-million.
Same-store sales – an important metric in the industry, which tracks sales growth at stores open for more than a year – rose by 1.6 per cent at Metro’s grocery stores and 3.9 per cent at its Jean Coutu drugstores.
The quarter was affected by a shift in holiday timing, with one less day of that busy shopping period occurring during the first quarter compared with the prior year. Accounting for that shift, same-store grocery sales would have risen by 1.9 per cent, according to the company.
Online grocery sales grew by 25.8 per cent in the quarter.
Editor’s note: An earlier version of this story incorrectly reported Metro's quarterly dividend as 4.1 cents. This version has been corrected.