Get used to seeing higher prices at the grocery store with more increases on the way in the coming weeks.
Industry experts say affordability is unlikely to improve much despite an expected 10-cent-per-litre drop in gas prices coming Monday.
Gary Sands, senior vice president for public policy and advocacy with the Canadian Federation of Independent Grocers (CFIG), says a four-cent-per-litre drop in diesel fuel isn’t stopping suppliers from raising costs, which grocers eventually pass onto consumers.
“I haven’t seen anything withdrawn as a result of the fuel excise tax being put on pause,” said Sands.
“We’re still facing surcharges and notifications of increased prices.”
He says businesses are already being forced to put out higher price tags.
“You’re seeing costs that go up from your suppliers in the double digits,” Sands said, explaining the situation from the perspective of a grocer.
“There’s just no way you can absorb that yourself. You’ll have to pass it on. If you don’t, you won’t be an independent grocer, you’ll be an out-of-business grocer.”
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Sands says unless the federal or provincial government does more to mitigate rising fuel prices, grocery prices — especially on perishable items — will just keep climbing.
“We import a lot of fruits and vegetables at this time of the year into Canada,” he explained.
“Those, and meat and dairy, also require cold refrigeration during their transportation. That adds to the cost. So those are the areas where I think consumers are going to see the biggest increases and the ones that are going to be more immediate.”
Sands says while a drop in regular fuel prices is welcome news for some — a four-cent-per-litre drop in diesel isn’t enough for suppliers to lower the price of shipping.
As the war in Iran continues, experts say drivers shouldn’t expect to save much more at the pump after the federal pause on the fuel excise tax Monday.
Patrick De Haan, head petroleum analyst at GasBuddy.com says there’s not much other than a ceasefire in the Middle East that could bring down the cost of fuel.
“Not in a significant way, not with the price of oil being so elevated solely because of the Strait of Hormuz,” said De Haan.
“There’s really very little that can be done to lower prices, given that there’s been a massive shift in supply and demand. Supply being significantly and negatively impacted by the blockage of 20 million barrels of oil through the Strait of Hormuz every day.”
He says the government can’t do much else beyond pausing the excise tax, as it already has.
“And beyond these layers on top of the cost of gasoline, like taxes and regulations, there’s not much that can be quickly done to significantly reduce the price.”
De Haan says he expects the cost of fuel to remain high in the coming months as long as the war in the Middle East continues.
“We expect that diesel prices will probably remain above the $2-per-litre mark for the foreseeable future until there is a major turn of events,” De Haan said.
“As goes these events, if the Strait of Hormuz becomes unblocked or reopened, that certainly would be a very good sign for motorists that lower prices could return.”
—With files from Joonha Jung