Rising Diesel Costs Threaten Canadian Food Inflation
Economists warn that surging diesel prices and trade disputes will drive up Canadian food costs this fall and winter.
Economists and food experts warn that rising global diesel prices will likely drive up food inflation in Canada throughout the fall and winter. A global energy shock, triggered by the war in Iran and the closure of the Strait of Hormuz, has disrupted oil and fertilizer shipments, contributing to a 75 per cent year-over-year increase in diesel prices as of August.
While food inflation cooled to 2.8 per cent in August, Mike von Massow, a food economist at the University of Guelph, notes that food prices typically rise across the board as diesel costs increase. This pressure is expected to intensify as Canada transitions from homegrown summer produce to imported goods. Additional economic strain stems from a declining Canadian dollar and retaliatory tariffs on agricultural machinery resulting from a trade dispute with the United States.
Randall Bartlett, deputy chief economist at Desjardins, describes a confluence of forces leading to higher food inflation. Amar Singh, head of Canadian retail insights at Kantar, suggests these costs will force consumers to reduce spending on non-essential items and host fewer social gatherings, potentially creating a domino effect across the broader economy.
