Portage la Prairie residents are seeing some relief thanks to a slight dip in inflation and steady gas prices, but that relief might not last according to Dan McTeague, president of Canadians for Affordable Energy. McTeague says the recent decline in the Consumer Price Index is likely tied to the federal government's decision to temporarily pause the carbon tax. However, he warns that this isn’t the result of any broader economic strategy."
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He notes that core inflation is still elevated around 3 per cent, largely because high fuel prices have had lingering effects on essential goods.
"The reason food and other products remain expensive isn’t due to month-over-month changes," McTeague says. "It takes time for the effects of the carbon tax to work through the system."
He adds that fuel costs are foundational, affecting everything from farming to food processing and shipping.
"You’re talking about an impact that made up 18 to 20 per cent of the actual cost," McTeague continues. "So the pause in carbon taxes might bring relief now, but it’ll take a lot longer for grocery prices to follow."
Industrial carbon tax likely coming next
McTeague feels the federal government plans to bring back a version of the carbon tax but under a new name.
"It won’t be called a consumer carbon tax. It’ll be called an industrial carbon tax," he says. "And refiners will pass that cost along quietly through wholesale price hikes."
He notes that while these changes won’t be immediately noticeable, the price difference between U.S. market rates and Canadian wholesale rack prices will reveal the tax’s return.
Portagers may see a stable summer at the pump
As of now, Portage la Prairie sits around 128.9 to 130.9 cents per litre. McTeague doesn’t expect much fluctuation through June.
"Prices are likely to hold until at least mid-September," he says. "Unless we get a major disruption — like a hurricane, refinery issue, or economic downturn — things should stay pretty calm."
He adds that any significant reintroduction of carbon pricing could change that quickly.
"When the government imposes these taxes again, and they will, it’ll drive prices back up," McTeague notes.
Longer-term concerns beyond inflation
Beyond the short-term benefits of the carbon tax pause, McTeague warns of deeper economic impacts tied to Canada’s net-zero agenda.
"The government’s decarbonization plan -- blocking pipelines, mandating EVs, kneecapping our energy sector -- is fundamentally inflationary," he says. "And we’re already seeing the fallout."
He adds that Canada’s dollar has weakened over the last few years, further increasing costs for imported goods.
"It now takes 140 Canadian pennies to buy a U.S. dollar. Last year it was 136, and the year before that, 132," he continues. "That adds about two cents a litre each year just from exchange rates."
With Parliament soon headed for summer recess, McTeague doesn’t expect any official movement on policy until fall.
"But the framework is already in place," he says. "The bureaucrats are ready. It’s not if, it’s when."