Diesel now costs $2.75 a litre up 80% in just one year — here's how that could hit your grocery bill

Diesel just crossed $2.75 a litre nationally — 80% higher than the roughly $1.50 it cost a year ago — right in the middle of the busiest, most fuel-hungry weeks on the Prairie calendar. For farmers trying to get a crop off wet fields before winter, increased fuel costs add to the ongoing cash-flow problem. For everyone else, it’s the first domino in a chain that usually ends at the grocery store.

“The reality is you either buy the fuel or you don’t,” said Keith Currie, who leads the Canadian Federation of Agriculture. “And if you don’t buy it, you don’t have a crop.” When to harvest isn’t an option for most farmers — neither is waiting for cheaper energy.

And those extra diesel costs don’t stop at the farm gate. Higher diesel costs impact the delivery of ingredients to food processors and refrigerated loads to distribution centres, restaurants and grocery stores. It’s also why a spike in diesel (or any farm production cost) during harvest time doesn’t stay a farm story for long.

Why is diesel spiking right now?

Conflict in the Middle East has disrupted global crude shipments, and Ukrainian strikes on Russian energy infrastructure have further squeezed supply, pushing up the cost of diesel and other oil-derived products. The timing couldn’t be worse for agriculture: Harvest is one of the most fuel-intensive periods of the year, said Bruce Burrows, executive director at Grain Growers of Canada.

How does a diesel spike at the farm reach your grocery cart?

Diesel touches nearly every step of the food chain, said Sylvain Charlebois, senior director of Dalhousie University’s Agri-Food Analytics Lab and longtime lead author of Canada’s Food Price Report: It fuels tractors and combines, moves ingredients to processors and carries refrigerated freight to distributors and grocers. But the cost doesn’t show up on shelves overnight. Contracts and fuel surcharges reset on their own schedules, so inventories and existing agreements absorb the shock first, delaying — not cancelling — the impact. Looking at historical data, his lab found diesel price increases tend to show up in grocery inflation with roughly a nine-month lag.

How much could this actually add to your bill?

The lab modelled a range, not a certainty: if elevated diesel prices persist through winter, grocery inflation could run 0.5 to 0.7 percentage points above where it would otherwise land, with a central estimate near 0.6 points; a shorter-lived spike would trim that to roughly 0.3 to 0.4 points. Charlebois is careful to call these scenarios rather than forecasts — a meaningful but modest addition on top of whatever grocery inflation was already doing, not a guaranteed shock.

What’s being done to soften the blow?

Ottawa extended its four-cent-per-litre diesel excise tax suspension through January 31, 2027, with the rate returning at two cents in February and March before reaching four cents again on April 1. Burrows says he’d like to see the federal government go further with a targeted, temporary per-litre rebate specifically for farmers during harvest. Relief softens the increase, Charlebois notes, but it doesn’t erase the higher fuel bills already moving through contracts, inventories and prices.

What should your household do now?

• Don’t expect an immediate jump — the lag in contracts and inventories means any effect builds gradually over months, not days
• Budget a small buffer for categories that travel farthest or need refrigeration, such as produce, meat and dairy, where transport costs weigh most heavily
• Watch specific categories rather than assuming a blanket increase — fuel-linked pressure tends to concentrate in a handful of items, not the whole cart
• Keep an eye on energy markets and federal relief measures; if diesel prices ease before winter, the modelled hit shrinks toward the low end

Steady response

Today’s fuel bill is becoming tomorrow’s grocery bill, but how big a bill depends on how long diesel stays this expensive. Nothing here calls for panic-buying or upending your budget this week. It does mean building in a modest cushion for winter groceries — particularly produce, meat and dairy — and treating the next few months of price tags as data, not surprise.