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Economic Viewpoint

From the Pump to the Pantry: Are Prices Set to Skyrocket Again?

May 14, 2026
LJ Valencia, Economist • Marc-Antoine Dumont, Senior Economist

Highlights

  • The Iran conflict has pushed energy prices up significantly in 2026. Given this new price environment, our outlook for inflation has shifted substantially higher, peaking at around 3.1% y/y in Q2 2026.
  • The impact of higher energy prices on inflation is most noticeable at the pump, with gasoline prices projected to be 30 cents per litre higher in both 2026 and 2027 than we expected before the conflict with Iran. The temporary removal of the federal excise tax on fuel does provide some small relief for households, but it’s dwarfed by the pre-tax price of gasoline.
  • We now expect food CPI and other CPI components excluding food and energy to be modestly higher than forecasted in February, but the impact of higher energy input costs should be delayed.
  • Looking ahead, the trajectory of inflation hinges on the duration of the conflict, which seems to have no end in sight. That said, downside risks continue to persist from the Canada‑United States‑Mexico Agreement (CUSMA) joint review.
NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.