Andrea Markey
Northern News Services

Yellowknife (Sep 07/05) - With gas prices setting new records almost daily, many people assume food prices will follow the upward trend due to increased transportation costs.

Ben Walker, general manager of the Yellowknife Co-op, thinks gas prices will subside before customers take too big of a hit on grocery items. Produce from Canada at this time of year, such as the tomatoes and cucumbers here, also helps keep transport costs lower than that from the southern U.S.

The equation isn't that simple, said Ben Walker, general manager of the Yellowknife Co-op. Although Yellowknife is "North," it follows Edmonton market prices, unlike other Northern communities.

"Consumers in Yellowknife won't see price increases until it is reflected in the south," he said.

Shipping costs are as high as they have ever been, but it is the stores that will feel the effects first.

This latest spike in gas prices will cost the store between $130,000 and $150,000 in transport costs, he said.

Walker is confident escalation in fuel costs will subside before customers notice it on their grocery bills, though. This time.

"These gas prices will cause a ripple through the market, but people will only see a nickel or dime increase in grocery prices," he said, adding transportation is only one component of the price of goods.

When gas prices do jump higher, produce from the southern U.S. will be the first to go up, although the strong Canadian dollar will help offset that cost, he said.

The Co-op trucks in more than 15 million pounds of goods per year at a cost of eight to 10 cents per pound. Even a slight increase in fuel costs is significant.

"In the North, stores get a bigger piece of the pie because there is no Zellers competing with Wal-Mart or similar stores with Canadian Tire," he said. "But in the end, customers always pay."

Expenses can only be cut so far and cutting back on labour costs doesn't work, he said.

Any extra costs are always a concern for small business owners who often don't have large buffer zones for price fluctuations.

Keeping costs down without sacrificing quality is a main priority for Booyah! Restaurant owners Gogoy and Lisa Reyes.

"There's good communication between small entrepreneurs," Gogoy said. "We are all monitoring prices in the grocery stores, but have no plans to raise menu prices."

Gogoy said he knows the price of food will eventually increase in Yellowknife.

"It's inevitable," he said.