Lexicon Financial Group Weekly Update — November 19, 2025
“Inflation destroys savings, impedes planning, and discourages investment. That means less productivity and a lower standard of living.”
From the desk of Craig Swistun, CIM, MFA-P, Portfolio Manager, Raymond James Investment Counsel, and Wayne Hendry, Client Relationship Manager, Raymond James Investment Counsel
ISSUE 205
Looking Around
As individuals, we need a large, diversified set of products and a host of services to live a comfortable life. These include commodities like metals and fuel, utilities like electricity and transportation, and services like healthcare and entertainment.
And we need food to eat.
Although inflation generally has declined recently, the cost increases have been felt more at the grocery store than anywhere else. According to a recent Statistics Canada report, inflation rose more than expected in October, with grocery prices up four per cent over the past year.
The increasing rise in the price of food is defined as “cost-push inflation.” This is the type of inflation that is the result of increased prices for production inputs working their way through the system. We don’t often think about how an egg, for example, makes it from the farm to our table. Feed, fuel, warehousing – increased costs get passed down the channel, which is why things cost more. This is especially evident when there’s a negative economic shock to the supply of key commodities due to supply issues, geopolitical events or natural events like droughts, floods, high temperatures, or heavy frost. (1)
Unfortunately, rising food prices are not new. Over the past 10 years, food prices in Canada rose nearly 50 per cent faster than those of non-food items. And over the past 12 months, many foods have posted double-digit increases, including coffee (32 per cent), salmon (21 per cent), oranges (17 per cent), bacon (16 per cent), beef (13 per cent) and rice (13 per cent). In the United States, food prices remain higher because of tariffs introduced on certain commodities, although these are in the process of being relaxed on things like coffee and beef.
Globally, the cost of food is rising, too. During the last five years, a number of events have generated pressures that have played a role: COVID, the Russian invasion of Ukraine, and United States (U.S.) trade war. These pressures have been exacerbated by high retail market concentration – in Canada and elsewhere – that makes it easier for grocers to pass on rising costs and then delay price reductions when costs subside.
There are other causative factors at play such as environmental developments (climate change) and human activity like overfishing and pollution that have contributed to rising food costs. However, one of the major factors is simply that demand has been increasing. As populations grow, demand for food increases. Simple economics dictates than when demand is high, should increase.
Global fish prices have tripled since 2001, thanks to falling global fish populations due to overfishing, climate change and habitat damage. Fish catches have also plummeted on the east and west coasts of Canada, dropping overall by 60 per cent in the past 20 years and 80 per cent for that quintessential fish of Canada, salmon.
Climate change has changed historic drought, storms, and flood patterns, which has led to shortages that have spiked prices for many imported food products like Brazilian oranges, Spanish olive oil, California vegetables, Vietnamese coffee, Asian rice and West African cocoa. In Southern Europe, the European Central Bank found that the 2022 heat wave boosted food price inflation by nearly a full percentage point. Food production has been affected similarly in Canada. Last year, extreme cold in B.C.’s Okanagan region caused severe damage to fruit trees, wiping out most of the harvest and pushing up prices of peaches, cherries and plums. This year, prolonged drought in Canada’s West and the Atlantic region has driven prices higher for Alberta beef and Nova Scotia blueberries.
Soil degradation and erosion have also reduced agricultural yields - up to 50 per cent in some regions. The UN Food and Agriculture Organization found that soil erosion has brought global crop yields down by 24 per cent since 1945. The implications that we can draw from this is that real food price increases are not going away any time soon. Currently, there is no single silver bullet for this and government policy targeting the affordability of food alone will not bring food prices down. (2)
Read and Watch
Want deeper insight into topics in your Weekly Update? Then, read and/or right click:
Energy stocks rise on major projects enthusiasm, while U.S. stock markets were mixed
Major sell-off on global markets: What has been driving the significant decline?
Japan’s Nikkei Stock Average Slides as Investors Book Profit on Tech Stocks
But there is hope. As the Chair of the Canadian Association of Farm Advisors, I get to spend a lot of time with people in Canada’s agricultural sector. Recently, it was announced that Agriculture Canada has developed new varieties of wheat that can potentially increase harvests by between eight and fifteen per cent over current varieties.
Ultimately, though, we’ll continue to see the impact of inflation on our grocery bills.
From an investment management standpoint, having a diversified portfolio can help offset inflation risk. If you want to know more about the diversification in your investment portfolio, just call or email us.
Looking Back
Last week, the S&P/TSX composite index (TSX) ended up 1.4 per cent. This after it touched a record closing high at 30,827.58 on last Wednesday. Gains for energy and technology shares helped the TSX recover from an earlier steep decline. Investor sentiment was buoyed by optimism over the end of the U.S. government shutdown, which sparked relief rallies but renewed concerns about the sustainability of the artificial intelligence (AI) boom quickly dampened this mood. (3)
Source: Factset
U.S. stocks finished the week mixed, as the Dow Jones Industrial Average and S&P 500 Index posted modest gains while the Nasdaq Composite, S&P MidCap 400, and small-cap Russell 2000 indexes all gave up ground. Concerns regarding elevated valuations and increased scrutiny around AI spending seemed to help drive a rotation away from many of the growth-oriented stocks that have helped propel indexes to recent all-time highs. However, a volatile trading session last Friday with limited major headlines led to some markets recovering their losses and closing higher for the week.
Despite the positive news of the end of the longest U.S. government shutdown on record and Trump signing a spending bill that will keep the government funded through January 30, stocks traded sharply lower last Thursday, as questions remained about how long it will take for conditions to return to normal. Hawkish commentary from several Federal Reserve (Fed) policymakers also appeared to weigh on stock markets. The key point of this commentary was that monetary policy needs to remain somewhat restrictive due to concerns about persistently high inflation. According to the CME FedWatch tool, the probability of an interest rate cut following the Fed’s December meeting declined to around 46 per cent as of last Friday afternoon, down from about 67 per cent the prior Friday and close to 95 per cent a month ago.
European stock markets edged higher, last week, on relief that the U.S. federal government had reopened. However, cooling sentiment on artificial intelligence curbed the gains. The pan-European STOXX Europe 600 Index ended 1.77 per cent up for the week.
Japan’s stock markets rose over the week and ended the week up. Sentiment was supported by the U.S. ending the country’s longest government shutdown in history. But, continued concerns about overstretched valuations of companies with revenue streams linked to artificial intelligence weighed on Japan’s technology sector.
Japan’s new prime minister, Sanae Takaichi, announced that her administration will seek to allow for more flexible spending by reconsidering the government’s current single-year fiscal discipline target and announcing plans to set a new fiscal target extending through several years. She shared her concept that responsible, yet aggressive, fiscal spending is required to boost economic growth.
Stock markets in China retreated, as investors pocketed gains a week after the leading domestic benchmark rose to its highest level in almost four years. Also, the latest batch of official indicators showed that China’s economy lost steam as it entered the fourth quarter. Fixed asset investment shrank 1.7 per cent in the first 10 months of the year - a record drop for the period. Industrial production rose a weaker-than-expected 4.9 per cent in October from a year ago, while retail sales rose 2.9 per cent, the fifth straight month of slower growth.
Other data showed that China’s housing market, now in its fourth year of a slump, remained under pressure. New home prices in seventy cities, excluding state-subsidized housing, fell 0.45 per cent in October from September (this the steepest decline in a year) while existing home values fell 0.66 per cent, the biggest drop in 13 months. The ongoing malaise in China’s property market continues to be a major growth headwind, making consumers reluctant to spend and worsening the deflation that has stalked China’s economy since early 2023. (4)
The opinions expressed are those of Craig Swistun and not necessarily those of Raymond James Investment Counsel which is a subsidiary of Raymond James Ltd. Statistics and factual data and other information presented are from sources believed to be reliable, but their accuracy cannot be guaranteed. It is furnished on the basis and understanding that Raymond James is to be under no liability whatsoever in respect thereof. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Raymond James advisors are not tax advisors, and we recommend that clients seek independent advice from a professional advisor on tax-related matters.
Inflation: What It Is and How to Control Inflation Rates, Jason Fernando, Investopedia, October 22, 2025
Food inflation is going up. And there’s nothing anyone can do about it, The Globe and Mail, October 21, 2025
TSX adds to weekly gain as energy shares rally, Avinash P and Fergal Smith, Reuters via MSN, November 14, 2025
Global markets weekly update - U.S. ends its longest federal government shutdown in history, T. Rowe Price, November 14, 2025
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Looking to Learn?
If you want to know more about some of the topics we wrote about this week, just click on the links below:
Rising food prices driven by climate crisis threaten world’s poorest, report finds