Government-run grocery stores seem to be the latest fad in politics across North America, with New York Mayor Zohran Mamdani, Toronto City Council, and NDP Leader Avi Lewis all championing them as a solution to today’s affordability crisis.
A couple of months ago, Toronto City Council voted overwhelmingly to pilot four municipally operated grocery stores without putting out so much as a cost estimate or feasibility study. Meanwhile, the NDP’s new federal leader, Avi Lewis, claims a national network of government-run grocery stores could save consumers between 30 per cent to 40 per cent on their grocery bills.
A new study put out by the Montreal Economic Institute seeks to bring a reality check to the government-run grocery store debate. As the authors of the new study note, it’s certainly valid for Canadians to be concerned about grocery prices, which have gone up by roughly 22 per cent in the past four years. But the reality is, retail grocery profit margins are between three per cent and five per cent on food items. That means, even if government-run grocery stores were able to eliminate that profit margin entirely, which they can’t, the average person would save between $11 and $18 a month on groceries. And that doesn’t even factor in the inefficiency of having government involved in grocery stores, which would surely mean higher costs through unionized workers, a failure to allocate resources properly, and a lack of competition.
As the authors of the study note, government-run grocery stores are responding to a symptom while the underlying disease is left unaddressed. Canada’s food inflation is partly caused by government policy. Consider, for example, supply management, which imposes over-quota tariffs of 200 per cent to 300 per cent on dairy, eggs, and poultry, costing the average Canadian household hundreds of dollars per year. These staples are far more expensive than they have to be, all because Canada’s politicians don’t have the courage to pursue the right public policy and put an end to supply management, which would upset the country’s powerful dairy lobby.
Then there’s barriers to interprovincial trade, which represent an internal Canadian tariff of nine per cent. These barriers make it harder and more expensive for Canadians to access goods, including food, made in other provinces. Tearing down interprovincial trade barriers, like ending supply management, could make a tangible impact on lowering grocery prices.
Other key suggestions from the MEI include streamlining regulatory and compliance costs throughout the supply chain, reducing taxes on transportation and production, using targeted transfers to vulnerable households to help them afford the essentials, and strengthening the broader economy through growth-oriented public policies.
Another factor not explicitly mentioned by the study is the industrial carbon tax, which increases the cost of fertilizing food and transporting it, which in turn increases the cost of food on the shelves.
Some may say that these solutions aren’t enough, and that government-run grocery stores ought to be tried. But consider the experience of Erie, Kansas. There, a municipally purchased store operated at a loss for years before the city leased it to a private operator. According to the MEI, Kansas City spent over $29 million in taxpayer dollars to sustain the Sun Fresh Market, which opened in 2018 and closed in 2025, facing empty shelves, safety issues, and financial losses. A government-run grocery store didn’t work in the U.S., and it won’t work here in Canada either. Pretending otherwise is just a fantasy.
Solutions for Canada’s food inflation crisis are at hand. But government-run grocery stores aren’t the answer. Instead, it’s time to tackle issues like supply management, internal trade barriers, the industrial carbon tax, and sectoral taxes, to get prices down for all Canadians.
Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center. He previously served as the Ontario Director at the Canadian Taxpayers Federation and a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.
