By Tom ParkinRapidly increasing retail sales margins on food and fuel inflation and supercharging inflation
The sales margin at gas stations and grocery stores is increasing twice as fast as among businesses in all retail sectors, according to data released last Thursday.
And that hike in margins is paying off handsomely for Loblaw investors, according to the company’s most recent financial report.
Food and gas sales margin up 2x faster than all retail
The retail service price index (RSPI) measures changes to the cost of “retail service,” the costs added to retail goods by retail service providers. The retail service price “is defined as the margin earned on the sale of a good,” according to Statistics Canada. It’s the difference between the wholesale price paid by the retailer and the final price charged to the consumer.
Across all retail businesses, the RSPI is up by 21.8 per cent, which tracks closely to the rate of inflation. But for gas stores, the index is up nearly 43 per cent — or twice as fast — while for grocery stores the RSPI is up nearly 56 per cent — about 2.5 times the pace of the whole retail sector.
In January 2020, the sector-wide RSPI was at 108. In the grocery sector the index was 102 and at 111 for gas stations. In April 2026, the RSPI had climbed to 131. But the sales margin index for gas stations and grocery stores had climbed to 158.
Statistics Canada provides data for grocery stores as an aggregate. It does not provide a more detailed break-down in the acceleration of sales margins showing values for supermarkets and smaller stores. Sales margins at the big supermarket chains may be growing even faster than for the grocery sector.
The cost of retail services does includes labour, rents, etc. born by the retailer as well as shareholder returns. But operational costs like wage and rent have certainly not increased two or more times faster than inflation.
Loblaw quarterly earnings up 18%, hikes dividend 10%
On May 6, Loblaw Companies Limited gave its financial statemnt for Q1 2026, reporting revenues of $14.5 billion from January 1 to March 31, up $580 million from the same quarter of 2025. Quarterly earnings of $594 million were up $91 million, or 18.1 per cent, from the same quarter in 2025.
The statement reported a “quarterly common share dividend increased by 10%, marking the fifteenth consecutive year of dividend increases.”
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A very limited and misleading analysis by Parkin, in keeping with his socialist ideology that seeks to blame the private sector for the country’s problems with affordability.
The data provided by Parkin doesn’t detail WHY the margins in the grocery industry have increased. Parkin either knows and intentionally omits the reasons to support his ideological thesis or, and I find this entirely plausible, he simply doesn’t know and is content to be blissfully ignorant. But let me help him. It isn’t because the gross margins on food are increasing but it reflects the diversification that has taken place within the product mix of most grocery stores, focusing on higher margin profit centres—pharmacy, garden centres, clothing & hardware, prepared meals and food.
Loblaw’s net profits have increased for two reasons. First is the product mix already noted above. The second is the increase in overall sales (at least Parkin got this part accurate) driven in part with Canadians spending more on food to eat at home in place of dining out as the affordability crisis has worsened.