As fuel prices climb across P.E.I., Mike MacDonald worries about the ripple effects on Islanders’ wallets.

The executive director of the Upper Room Hospitality Ministry said their Charlottetown food bank serves about 3,000 people each month. He has heard a lot from people about how the high cost of living is driving them to seek help.

Now, with the U.S.-Israel war on Iran in its third week and no end in sight, fuel prices are surging globally, including on P.E.I. MacDonald said those higher costs could push food prices even higher, increasing the demand for food banks on the Island.

“We’re certainly expecting more and more people having to return to food banks and also… people that potentially donate to us may not be able to donate to us because of those high costs as well,” he told CBC News.

“It’s certainly concerning.”

MacDonald is not alone in his concerns. Experts say grocery prices in Canada have already risen significantly, more than 30 per cent since February 2021, according to Statistics Canada. Rising fuel costs are expected to add further pressure in the weeks ahead, especially for fresh fruits and vegetables, which at this time of year still travel long distances to reach Canadian stores.

The war, which began on the last day of February, has disrupted tanker traffic in the crucially important Strait of Hormuz shipping route. Iran has threatened to strike ships attempting to pass without its approval.

Patrick De Haan, head of petroleum analysis at GasBuddy, said oil prices are set on a global market driven by supply and demand. Disruptions to shipping through the Strait of Hormuz, through which roughly a fifth of the world’s oil passes, have sent prices for crude oil, gasoline, and diesel soaring around the world.

“Though Canada may not be a beneficiary of crude oil through the Strait of Hormuz … it is very all tied to the global price of oil, and that is seeing Canadian prices rising,” De Haan said.

As of Friday morning, GasBuddy.com showed the average price of gasoline across Canada at about $1.7 per litre, while diesel averaged about $2.1 per litre.

Prices on P.E.I. are even higher: on Friday, the minimum pump price for regular gas rose to nearly $1.9 per litre, while diesel climbed to about $2.4 per litre. That’s roughly a 25 per cent jump compared to three weeks ago.

De Haan said diesel prices, in particular, affect nearly every step of the food supply chain, from transportation to distribution since goods are largely moved by trucks that run on diesel. Farmers also rely on diesel to power tractors, combines and other essential equipment.

“The price of diesel is a significant factor to these networks… and the increased cost is so significant, it is not something that can be burdened simply by one area of the supply chain,” De Haan said. “It likely will manifest in higher food prices in the weeks ahead.”

Some foods may rise faster than others

Mike von Massow, a food economist at the University of Guelph, said imported products, which already have a higher share of transportation costs built into their prices, may see more significant increases.

He said this time of year, Canada still relies on fresh fruits and vegetables imported by truck from places like the southern U.S. and Central America.

“We would expect that those prices will come up relatively quickly because fuel prices are already up,” von Massow said, adding the impact could be felt within a week or two.

Meanwhile, he said domestically produced items such as milk and cheese may also see some increases, but likely not as sharply.

“So in P.E.I., table potatoes will have been in storage, we shouldn’t see those go up significantly because they’re not going long distances,” he said.

He added that processed foods, like cereal, are generally less affected because they are easier and more efficient to transport in bulk.

However, von Massow noted that P.E.I.’s location can still drive up costs. Much of Canada’s food processing takes place in Ontario and Quebec, meaning products shipped to the Island must travel farther, increasing transportation costs.

Food prices already rising faster than inflation

Similar to national trends, grocery prices on P.E.I. have risen faster than overall inflation, increasing by about 30 per cent over the last five years.

Several factors have driven food prices higher in recent years, including the war in Ukraine, which affected wheat and vegetable oil supplies, climate impacts on coffee production, and historically low cattle supplies driving up beef prices, von Massow said.

“The war in Iran is undoubtedly going to affect food inflation to some degree.”

He added that rising fuel costs will likely have an even broader impact on overall inflation, since fuel and transportation are key components of the consumer price index. That means higher costs for driving, public transit and travel. In addition, other goods shipped through the Strait of Hormuz could become more expensive, indirectly affecting food affordability.

“If everything in our life is getting more expensive, then the difficulty in paying for food is made worse,” von Massow said.

De Haan said if the conflict continues and fuel prices keep rising, the effects will likely show up in inflation data in the coming months.

“If the U.S. were to cede to pressure, they likely would start to help ships transit through the Strait of Hormuz and in time, in the next few months, we could eventually see fuel prices declining,” De Haan said.

“But for now, again, it’s difficult to predict.”