Food costs could rise by 30 to 35 percent as a result of increased diesel prices, exacerbating Canada’s inflation problems.
At least that is the perspective of one petroleum industry analyst.
As a result of Russia’s decision to attack Ukraine, gasoline prices have risen to record highs in Ontario, with the average cost of a litre of fuel anticipated to jump another seven cents to $1.67.9 across the GTA on Thursday.
However, with the geopolitical concerns, diesel prices have risen five cents this week, with another seven cent hike expected on Thursday.
In an interview with CP24 on Wednesday, Canadians for Affordable Energy President Dan McTeague noted that “all modes of bringing products to market are usually driven by diesel” and for that reason its cost will have a more direct impact on the price of consumer goods over the coming weeks and months.
In fact, McTeague predicted that the rising cost of fuel will likely drive inflation to levels we have “probably not seen in our in our lifetime.
“The reality is that with diesel moving much higher than gasoline, we’re not only looking at higher fuel prices, but pretty much the cost of everything as if inflation isn’t high enough,” he said. “I am not an agro-economist but I can tell you in my discussions with many, which is part of my work here, we’re looking at a 30 to 35 per cent increase in food prices as a result of these increases in diesel and we haven’t even started the planting season yet.”
McTeague said that he anticipates that the price of gas in the GTA will hit $1.90 per litre or even $2 in the coming weeks, as sanctions limiting Russia’s ability to export oil push crude prices towards $120 a barrel.
Amid the price pressures some are calling on the feds to scrap a planned 11 cent increase to the carbon tax slated for April 1, including Brampton Mayor Patrick Brown.
During a briefing at Brampton City Hall earlier on Wednesday, Brown said that he is particularly concerned about inflationary pressures that will put “any additional burden on the backs of small businesses and families” that have already suffered throughout the COVID-19 pandemic.
He said that he is calling on the feds to “freeze” the planned increase for the time being.
“There should be no new burdens right now, no new taxes, as we try to get through this very difficult period,” he said. “There certainly shouldn’t be an increase right now to gas prices, there shouldn’t be an additional federal tax on something that we all rely on and that’s something I’m going to be writing to the federal finance minister about. I believe now is the worst possible time to put any new burdens on Canadians.”