Loblaw Companies L-T topped Wall Street expectations for fourth-quarter profit on Thursday, helped by sustained demand for daily essentials and easing input costs.

Retailers in Canada have been benefiting from sales of essential items like groceries and pharmaceuticals, and a customer shift to affordable private labels as rising prices had steered them away from big-name brands.

Loblaw posted a 3.4% rise in its retail segment sales, riding on demand for its beauty products and medicines.

Canada’s annual inflation rate slowed more than expected to 2.9% in January, while core price measures have also eased.

The Brampton, Ontario-based company expects its full-year 2024 adjusted earnings per common share to grow in the high single-digits.

Easing supply chain snags and decelerating inflation in Canada are likely to bring down costs for retailers, boosting their margins.

With food prices coming down in Canada, analysts expect consumer spending power to grow and boost sales across products, including discretionary items like apparel.

Fourth quarter adjusted earnings per share came in at $2.00, compared with analysts’ average estimate of $1.90, according to LSEG data.

The company’s revenue was $14.53 billion in the quarter ended Dec. 30, compared with analysts’ expectations of $14.52 billion.