The federal government’s new grocery rebate aims to ease the burden of rising food costs, but experts said it may only provide temporary relief as inflation pressures continue to affect Canadians.
The Canada Groceries and Essentials Benefit will increase the GST credit and provide a one-time boost to low- and modest-income households. The Parliamentary Budget Officer estimates the program will cost $12.4 billion over five years.
Professor Pascal Thériault, an agricultural economist at McGill University, said the rebate will help in the short term, but its long-term effects are uncertain.
“I think it will ultimately have some effect but it might be limited,” Thériault said. “Giving money to people increases spending capacity and can potentially drive inflation. In the short term, it is beneficial for people getting the rebate, but in the long term there is a risk of driving food inflation up.”
The rebate will be delivered through the existing GST credit system, which targets low- and modest-income Canadians.
“There is no perfect method,” Thériault said. “But by using CRA reports, they will be able to help people based on income and children in the household.”
The benefit is expected to help families the most, particularly those with lower incomes. However, individuals living alone may still struggle.
“Individuals will not be as supported as families,” Thériault said. “They have less access to bulk purchases and often must support full costs on their own.”
Thériault also warned of potential unintended consequences.
“More money in the system is more inflation. There is no way around it,” he said
Thériault said that post-COVID inflation was partly driven by excess spending power in the economy.
Thériault said that some have suggested alternatives such as price controls, but those measures could create additional problems.
“Price controls do not work, you are just delaying the inevitable,” he said. “If retailers are forced to freeze prices while costs continue to rise for manufacturers and processors, certain products may disappear or prices could spike once controls are lifted.”
For students already facing high grocery and housing costs, the rebate brings mixed reactions.
“It would definitely help with groceries, but it doesn’t fix the bigger issue,” said Aisha Singh, a second-year student of Conestoga College who works part-time while studying. “Prices keep going up, and it feels like we’re constantly trying to catch up.”
International students may face additional challenges.
“If food costs increase because of the credit, international students could be negatively affected,” Thériault said. “They are often more limited in their capacity to work.”
Bhavya Patel, an international student studying business at Humber Polytechnic, said affordability remains a major concern.
“Even if some Canadians receive support, international students often don’t qualify for these benefits,” Patel said. “We still have to manage rent, tuition, and groceries on limited income.”
Thériault said the rebate should be viewed as a short-term relief measure rather than a permanent solution. The program is currently scheduled to end in 2031.
“It is positive as lower-income households spend relatively more money feeding themselves,” Thériault said. “For them, it can help stabilize budgets.”
To address rising food costs over the long term, Thériault said Canada needs stronger food production infrastructure and improved agricultural productivity to reduce reliance on imports. He also pointed to the new Grocer Code, which aims to improve transparency in the food supply chain.
While the rebate may offer temporary financial breathing room, broader structural changes may be needed to stabilize grocery prices in the years ahead.
