May Food CPI: Outpaces overall CPI for 16th consecutive month

Research evidence excerpt

May Food CPI: Outpaces overall CPI for 16th consecutive month

RBC Dominion Securities Inc.

Irene Nattel (Analyst)

(514) 878-7262,

irene.nattel@rbccm.com

Martin Gravel, CFA

(Associate Analyst)

(514) 878-7264,

martin.gravel@rbccm.com

June 22, 2026 Kseniia Tokarieva

(Associate)

(416) 842-9922, May Food CPI: Outpaces overall CPI for 16th kseniia.tokarieva@rbccm.comRESEARCH consecutive month

Backdrop continues to favour grocers with a strong value positioning

Food purchased from stores CPI +4.3% in May and close to 30% on a cumulative five-year basis,

reinforces our view that value-oriented consumer behaviour is likely sticky.We reiterate our view that

secular winners are likely to remain at the upper end of long-term trading ranges as investors assign a

premium to sustainable, defensive growth, and reiterate Loblaw (TSX:L) as our best idea for 2026.EQUITY May all-items CPI +3.2% Y/Y, +2.2% excluding gasoline. Transportation +9.0% and Food +3.8% led the

increase. Moderating fuel prices should ease the burden on consumer wallets, but we maintain our

view that sentiment is likely to remain cautious and value oriented, particularly with gasoline prices still

+11% Y/Y.

Fresh produce (average +7.3%) led the increase in May; could remain a persistent near-term upward

contributor to food-at-home inflation if tariff-related acreage cuts, weather volatility, diesel prices,

and CAD weakness persist. Fresh produce prices accelerated sharply in May, with fresh fruit (+5.3% Y/

Y) and vegetables (+9.0% Y/Y) both posting stronger year-over-year gains than in April. The month-over-

month jump in fresh vegetables (+5.5%) was the largest for May since 2008. Key drivers were supply-

side pressures, including unfavourable weather in key growing regions, reduced planted acreage linked