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Canada's Fast-Food Inflation Slows as Softer Consumer Demand Weighs on Restaurants, BMO Says

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Canadian fast-food price inflation eased to 1.7% in June, the slowest annual increase since 2020, as distortions from last year's temporary sales tax holiday continued to fade, according to Bank of Montreal Capital Markets (BMO) in a Monday note.

Prices have eased for categories such as meat, bakery products, sweets and snacks, while coffee prices have stabilized, wrote BMO Senior Economist Shelly Kaushik in the note. However, grains, frozen foods and dairy products continue to face upward pressure.

The slower pace of fast-food price increases suggests businesses have limited ability to pass higher costs on to consumers, helping keep overall inflation contained so far, added BMO.

"Bigger picture, these restaurants are facing broadly softer consumer demand, especially for discretionary items," wrote Kaushik.

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