The CIBC says recent crop reports are pointing to a run-up in food prices of about four per cent next year.
The bank’s chief economist, Avery Shenfeld, says the drought in the U.S. has hit the corn and soybean crop hard and will translate into overall higher food prices next year.
But Shenfeld says the price shock likely won’t be as bad as in 2008, partly because wheat in many affected areas had been harvested before the drought hit.
Still, he says consumers in both the U.S. and Canada are likely to see food prices rise an average of about four per cent annualized sometime in 2013.
That’s about double the current rate of food inflation in Canada as measured by Statistics Canada.
In 2008, food inflation in Canada shot up as much as 7.9 per cent due to crop failures in key parts of the world.