Q: Hello, gas prices have gone up, fertilizer prices also, so there is a real risk that inflation will pick up at the grocery storemin a few weeks/months. Will chains like Metro or Loblaws gain from this? What happened in 2022-2023 when grocery prices when up quite a bit? Thanks
5i Research Answer:
MRU rose 4% in 2022, L rose 8%. Sales rose with inflation, but stocks were still pressured a bit with higher interest rates. Still, investors saw the sector as a good place to hide out in while everything else declined. Margins can improve with inflation, but much will also depend on input and labour costs, which have pressured profits in past cycles.