Loblaw Chief Financial Officer provides commentary on food inflation

March 21, 2024, Brampton, ON. As Canada’s recent inflation numbers continue to show positive momentum, Loblaw Companies Limited’s (TSX: L, “Loblaw”) Chief Financial Officer, Richard Dufresne, provides commentary on the trends shaping food prices in Canada:

“According to the most recent data, inflation in Canada declined once again to 2.8% in February. Notably, food inflation (from food bought at stores) is now sitting at 2.4%, the lowest it has been since July 2021, and the first time it’s been lower than overall inflation since October 2021. For Canadians who continue to face extraordinarily higher costs of living, this is good news and signs point to continued moderation in future months.

After four decades where the average grocery inflation rate was about 3%, in the past two years grocery inflation has averaged nearly 9% - levels unheard of in a generation. In recent years, a confluence of global forces has been at play leading to increased prices globally and in some cases, limited products. These include geopolitical instability in Europe, supply chain backups from COVID, extreme weather events (particularly in key growing regions), labour challenges, higher energy costs and, specific to Canadian prices, a weak Canadian dollar compared to the United States.

We are starting to see supply chains recover, a stabilization – and in some cases reduction - in commodity prices and shipping costs beginning to return to pre-pandemic rates, key factors in overall food pricing. Food cost increases from suppliers are starting to slow, and while some proposed increases remain above inflation, the reductions are encouraging.

An interesting example is Margarine, where prices were lower last month than in January. In this example, vegetable oil prices have retreated from their peak and we've seen favourable harvest conditions for soybeans in South America. Through our private label brands, we have passed down these savings to customers.

For our part, Loblaw’s ongoing efforts to lower food prices continues to benefit Canadians. Our internal inflation rate in February was materially lower than CPI food inflation. A few examples of this work include:

Optimizing the company’s store network to include more discount locations, opening 31 new Maxi and No Frills stores in the past year, and planning to open at least 40 more in 2024. These stores save customers approximately 15% compared to conventional grocery stores, and will reach 1.8 million more Canadians

Introducing new promotions, including the innovative Hit of the Month campaign, which brings aggressive prices on key products across the company’s entire store network

Providing deeper discounts on 35 everyday items, ensuring that products that matter the most to Canadians are available at an average of approximately 30% off regular prices

As a company, our purpose is to help Canadians live life well, and making good food more affordable and accessible is one of the most important ways we can do that. We’re turning over every stone in our efforts – lowering prices, increasing points offers and making meaningful changes to our business to help customers save money in our stores.”

****

About Loblaw Companies Limited Loblaw is Canada's food and pharmacy leader, and the nation's largest retailer. Loblaw provides Canadians with grocery, pharmacy, health and beauty, apparel, general merchandise, financial services and wireless mobile products and services. With more than 2,500 corporate franchised and Associate-owned locations, Loblaw, its franchisees and Associate-owners employ more than 220,000 full- and part-time employees, making it one of Canada's largest private sector employers.

Loblaw's purpose – Live Life Well^® – puts first the needs and well-being of Canadians who make one billion transactions annually in the company's stores. Loblaw is positioned to meet and exceed those needs in many ways: convenient locations; more than 1,100 grocery stores that span the value spectrum from discount to specialty; full-service pharmacies at nearly 1,400 Shoppers Drug Mart^® and Pharmaprix^® locations and close to 500 Loblaw locations; PC Financial^® services; Joe Fresh^® fashion and family apparel; and four of Canada's top-consumer brands in Life Brand^®, Farmer’s Market^TM, no name^® and President's Choice^®. For more information, visit Loblaw's website at www.loblaw.ca and Loblaw's issuer profile at www.sedarplus.ca(Open in a new tab).