On a cold morning at a gas station, the number on the pump can turn a routine stop into a calculation. For many households, inflation is no longer an abstract chart but a receipt they can hold in their hand. Economists expect that feeling to show up in Canada’s March inflation report when Statistics Canada releases it on Monday ET.
Why is inflation expected to jump in March?
The immediate reason is simple: gas prices surged 21 per cent between February and March after the war in Iran and the resulting near-closure of the Strait of Hormuz reduced the flow of oil from the Middle East and pushed up global energy prices. Douglas Porter, chief economist and managing director at Bank of Montreal, said the month-over-month increase in gas is the highest on record in data going back to 1950.
Porter said the increase will be a “shock” to the consumer price index. He noted that even during Russia’s invasion of Ukraine, Canada did not see a monthly increase above 12 per cent. Canada’s headline inflation rate rose 1. 8 per cent year over year in February, and Bank of Montreal forecasts it will rise to 2. 6 per cent in March and above three per cent in April.
How does a higher gas price reach beyond the pump?
The effect is not limited to drivers making one more expensive fill-up. When fuel costs rise sharply, transportation and production costs can move with them. That matters for grocery deliveries, shipping, and the wider household budget. Peter Schiff, a renowned economic forecaster and outspoken gold advocate, argued in a recent post on X that higher oil prices likely do not directly drive inflation. In his view, they work through a chain reaction: higher energy costs reduce spending elsewhere, weaken the economy, and can eventually lead to bigger deficits, lower interest rates, and quantitative easing.
Schiff’s argument focuses on sequence rather than the pump itself. Higher oil prices mean consumers spend more on energy, leaving less room for other purchases. That can slow demand. Whether that slowdown becomes broader inflation depends on what follows next in the economy and in policy.
What does this mean for households and the broader economy?
The strain is easy to see in daily life. Gas prices climbed from $1. 28 to $1. 78 on average in a matter of weeks, a 27 per cent jump at stations across the country, and later rose to an average of $1. 91 a litre. For a driver filling a mid-size vehicle with a 55-litre tank, that is roughly $27. 50 more per fill-up. For a household with two drivers filling up twice a week, the added cost can climb into the hundreds over several months.
Trevor Tombe, a professor of economics at the University of Calgary and director of fiscal and economic policy at the School of Public Policy, estimates that a sustained 50 per cent increase in crude oil prices would add roughly $500 to the average household’s costs each year in direct fuel spending alone. Those costs do not stay at the pump. Trucking costs rise, which can push up grocery prices, and airlines face higher operating expenses. If households pull back on spending to absorb those costs, the pressure spreads.
At the same time, Porter said the federal government’s temporary suspension of the fuel excise tax on gasoline starting April 20 is a “big step in the right direction. ” He added that the 10 cents per litre of savings will only offset part of the increase and could be erased if prices rise further. That is why the March report may look especially sharp even if the broader path of inflation remains unsettled.
What are economists watching next?
The key question is whether this is a one-month shock or the start of something more durable. One view, laid out in the Bank of Montreal forecast, is that the March report will reflect the immediate surge in gas, with April still elevated because of the same energy pressure and the timing of the tax suspension. Another view, echoed in the discussion around broader inflation, is that the real test is whether higher fuel costs begin to alter spending patterns across the economy.
For now, the scene at the pump carries more weight than usual. A routine stop has become an early signal for a national data release, and the number beside the nozzle may say as much about household pressure as it does about global energy markets. When the March figures arrive on Monday ET, the question will not just be how high inflation reads, but how many people already felt it before the statistics were published.
