Canadians are feeling the squeeze at both the pump and the grocery checkout, as the country’s inflation rate climbed to 2.4 per cent in March up from 1.8 per cent in February driven by surging fuel costs and a sharp jump in fresh food prices, according to the latest figures from Statistics Canada.
The rise marks a notable acceleration in the cost of living, with the ongoing conflict in the Middle East and the closure of the Strait of Hormuz sending ripple effects through Canada’s energy and food supply chains alike.
For families trying to stretch their grocery budgets, March brought little relief. Store-bought food prices climbed 4.4 per cent compared to the same month last year, edging up from the 4.1 per cent recorded in February. But it was the fresh produce aisle that delivered the sharpest shock.
Fresh vegetable prices jumped 7.8 per cent in March a dramatic reversal from February’s near-flat reading of just 0.5 per cent. It is the steepest annual increase in vegetable prices since August 2023, when they surged 8.7 per cent. Cucumbers, peppers and celery were among the hardest-hit items, with Statistics Canada pointing to “tighter supplies related to adverse growing conditions in producing countries” as a key factor.
There was at least one bright spot on the food front: the pace of price growth at restaurants eased considerably, rising 3.2 per cent in March compared to a steep 7.8 per cent increase in February.
Energy prices swung sharply from one month to the next. After falling 9.3 per cent in February, they reversed course and rose 3.9 per cent in March. Gasoline was the primary culprit, with Canadians paying 5.9 per cent more at the pump year-over-year and a striking 21.2 per cent more compared to February alone.
Natural gas, however, offered some cushion. Prices fell 18.1 per cent, with Statistics Canada noting that Canada’s natural gas market is largely tied to North American supply and therefore more insulated from the volatility gripping global energy markets. Strip out gasoline entirely, and inflation actually slowed from 2.4 per cent in February to 2.2 per cent in March.
Retail analyst Bruce Winder says the connection between Middle East instability and Canadian grocery bills is direct and increasingly hard to ignore. “The conflict in the Middle East is causing real-time inflation on transportation costs for food,” he said. And unlike past years, Canadians shouldn’t count on the domestic growing season to bring prices down a global fertilizer market disrupted by the same conflict is keeping input costs elevated well into the spring.
“The global fertilizer market is upended as well with the Middle East conflict,” Winder added.
Despite the uptick, some economists noted that the numbers could have been worse. BMO chief economist Doug Porter pointed out that traditional core inflation measures those that strip out food and energy remain anchored close to the Bank of Canada’s 2 per cent target, offering a degree of underlying stability beneath the headline turbulence.
TD Bank senior economist Leslie Preston expects the Bank of Canada to hold its benchmark interest rate steady at its upcoming meeting, suggesting policymakers are not yet alarmed enough to intervene.
Still, the Canadian Chamber of Commerce’s principal economist Andrew DiCapua cautioned against complacency. “The longer the conflict in Iran and the closure of the Strait of Hormuz continue, the more it will test Canadians’ patience and the higher the risk of pushing already elevated inflation expectations even further,” he warned.
For now, Canadians are left navigating a cost-of-living landscape shaped as much by geopolitics as by domestic economic forces with no clear end in sight.
