Trudeau summons top Canadian grocers in fight against rising food prices

By David Ljunggren and Deborah Mary Sophia

OTTAWA (Reuters) -Canadian Prime Minister Justin Trudeau on Thursday said he had summoned the country's top grocers to help find solution to the surging food prices and vowed to cut federal taxes on new rental buildings, as he fights an affordability crisis that has dented his party's opinion poll ratings.

After meeting with Liberal Party legislators in London, Ontario, Trudeau said the government asked the executives of the five largest grocery chains, including Loblaw Co, Sobeys and Metro, to come to Ottawa next week to explain how they will stabilize prices. The five companies, representing 80% of the Canadian grocery market, have until Oct. 9 to come up with a proposal.

"If their plan doesn't provide real relief ... we will take further action and we are not ruling anything out, including tax measures," said Trudeau.

"It does not make sense in a country like Canada that our largest grocery chains should be making record profits while Canadians are struggling to put food on the table."

In 2022, Canada's three largest grocers - Loblaw, Sobeys, and Metro - collectively reported more than C$100 billion ($74 billion) in sales and earned more than C$3.6 billion in profit.

Trudeau, who is under pressure over a lack of affordable housing, said his government will remove the federal 5% sales tax on the construction of new rental apartment buildings.

"There are many developers and builders that are not moving forward with building new apartments because the costs are simply too high," Trudeau said, adding the measure will lead to the creation of many new apartment buildings.

Trudeau's minority government is propped up by left-leaning New Democrats Party and election is only due in 2025. But opinion polls show the main opposition Conservatives, who accuse Trudeau of driving inflation through high government spending, would win power and end eight years of Liberal rule if an election were held now.

BOOSTING COMPETITION

Several grocery executives denied profiteering charges in a parliamentary committee earlier this year. But the lack of competition in the grocery sector has also irked the competition watchdog, and in June, it said more players were crucial to combat soaring prices of essential goods.

Trudeau waded into that debate on Thursday and said his government will remove provisions in competition laws that companies use to defend big mergers, saying cost savings outweigh negative impacts on competition.

Soaring food prices have been a concern for European governments as well and in March the French government reached a deal with the country's main supermarket chains to help shoppers cope with food prices.

But the Retail Council of Canada pushed back against Trudeau's claims and blamed the surging prices on food manufacturers and producers passing on higher costs to the grocers.

The association's spokesperson Michelle Wasylyshen said any "credible discussion" on restoring prices must include food processors, manufacturers and other relevant businesses within the supply chain.

Sobeys and Walmart Canada had no immediate comment, while Metro declined comment. Loblaw said the company was "always open to discussions about what more can be done across the industry."

In July, Trudeau shuffled much of his cabinet to focus on issues like a housing shortage and the rising cost of living and on Thursday he reiterated that he had no plan to quit.

Conservative leader Pierre Poilievre on Thursday again blamed the housing crisis on Trudeau, and said he would introduce his own plan to get homes built to parliament when it reconvenes next week after the summer break.

($1 = 1.3506 Canadian dollars)

(Reporting by David Ljunggren and Steve Scherer, additional reporting by Deborah Sophia in Bengaluru; Writing by Denny Thomas editing by Grant McCool, Alistair Bell, David Gregorio and Lincoln Feast)