AI Modelling Predicts Food Inflation for 2025

By Jesse Tahirali

According to a new report, rising food costs are expected to continue into the new year, with predictions that prices may increase by as much as five percent in 2025.

The report, known as Canada’s Food Price Report 2025, was released recently and indicates that the prices of food will likely increase beyond Canada's target inflation rate of two percent.

Overall, the report estimates that food costs will rise between three and five percent. Meat products, in particular, may see price increases ranging from four to six percent.

This report is a collaborative effort among four Canadian universities; the authors come from Dalhousie University, the University of Guelph, the University of Saskatchewan, and the University of British Columbia.

For the current year, the team forecasts that a family of four can expect to spend about $16,833.67 on food, an increase of over $800 compared to the previous year.

A Range of Influencing Factors

The report outlines a variety of factors that can impact food prices. These include climate change, geopolitical tensions, energy costs, and levels of consumer debt.

Sylvain Charlebois, the lead author of the report and a professor at Dalhousie University, notes that there are many unpredictable events that can influence grocery prices.

“Every year we analyze factors that could drive prices higher, with climate change being a recurring wild card,” Charlebois said. He highlighted that next year, the return of Donald Trump to the White House could also create concerns regarding tariffs.

Unforeseen events can significantly affect the model's accuracy. For instance, Russia's recent decision to reduce wheat exports could lead to future price increases, as it is the largest exporter of wheat globally, which makes up about 20 percent of total calories consumed worldwide.

Charlebois mentioned that the predictions made in the past have generally been reliable. Six out of the last seven years, food price inflation has fallen within the ranges they predicted.

Previous Predictions and Accuracy

Last year’s report made a prediction of a 2.5 to 4.5 percent increase in food prices for 2024, which aligned with the 2.8 percent increase that was ultimately observed.

This year’s outlook anticipates a 3 to 5 percent rise in prices for 2025.

Using AI for Predictions

Researchers are striving to analyze every variable that contributes to rising food prices. Kristina Kupferschmidt, a contributor to the report who is currently an assistant professor at the University of Prince Edward Island, stated, “It’s not just one factor causing current prices to rise; it’s a complex interplay of many elements.”

She explained that their research involves looking at various data points, such as drought levels and exchange rates, to understand price trends.

The team has been using machine learning techniques for years to forecast future prices, but they have recently integrated new technology that allows for a broader analysis.

Large language models (LLMs), a form of artificial intelligence, enabled the researchers to process additional information beyond numerical data. This includes analyzing text reports from previous years to identify factors that might have been overlooked.

“This report exemplifies the collaboration between human expertise and AI in enhancing our forecasts,” Kupferschmidt added. “While AI can assist in predictions, the human perspective is invaluable in this process.”

She believes that the five percent figure is a cautious estimate, aiming to prepare Canadians for potential price increases. The goal is to help families budget effectively for the coming year.

inflation, food, predictions