Canada to see gas prices drop by 18 cents/liter

A new report released on Wednesday indicates that Canadians will soon notice lower gasoline prices after the government eliminates the consumer carbon price. However, it may take longer for consumers to see changes in the prices of other goods. The report from Desjardins Economics comes shortly after Prime Minister Mark Carney and his cabinet announced that the carbon levy would be set to zero starting April 1. This levy had been intended to offset inflation through quarterly rebates, with the last rebate also coming in April. According to Desjardins, removing the carbon price could reduce overall inflation in the coming year. This may provide the Bank of Canada some flexibility to lower interest rates and support the economy amid trade tensions with the United States. Motorists in areas with federal carbon pricing are expected to see gas prices drop by nearly 18 cents per litre, saving about $9 on a full 50-litre tank. Natural gas prices are also projected to decrease by 12.8 percent between March and April. The carbon price affects multiple fuels, including gasoline, propane, and coal. Some provinces like British Columbia are also scrapping their carbon taxes in response to the federal decision. While the price of gas may decrease quickly, grocery prices may take longer to adjust. Lower transportation costs should eventually lead to cheaper food prices, but other factors, such as global oil prices, also play a significant role in gas pricing. Desjardins estimates that inflation in April will be 0.7 percent lower than it would have otherwise been, bringing the annual inflation rate down to 2.1 percent. February's inflation rate was 2.6 percent, largely influenced by the end of a temporary sales tax break. Experts believe that while the elimination of the carbon tax provides a short-term boost, other economic factors like trade tariffs and currency fluctuations could counteract these benefits in the longer term.