The Decibel - Groceries, airfare and EVs: the war is changing how we spend

Episode Date: April 9, 2026

After the U.S., Israel and Iran agreed to a ceasefire on Tuesday night, oil prices eased on Wednesday. Many details of the ceasefire remain unclear – including when and how the Strait of Hormuz will become passable again. Since the effective closure of the Strait, the rising cost of oil has been impacting prices across a number of industries – from airfare, to delivery, to groceries. In some cases, fuel surcharges are as high as 45 per cent. Today, the Globe’s consumer affairs reporter, Mariya Postelnyak, breaks down why we’re seeing prices go up, whether they’ll stick around, and how consumer behaviour is shifting. Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

On Tuesday evening, Iran, the U.S. and Israel, agreed to a two-week ceasefire, allowing U.S. President Donald Trump to pull back from his threat to bomb Iran so severely that, quote, a whole civilization will die, end quote. As of Wednesday, many details of the ceasefire remain unclear. But the plan does allow Iran and Oman to start collecting fees on ships transiting through the Strait of Hormuz. though the matter of when the flow of ships through the strait will resume is also unclear. Oil prices tumbled nearly $20 per barrel on Wednesday with the news of the ceasefire deal. But the ripple effects of the chokehold on a fifth of the world's oil supply are expected to have a lasting impact.

The average cost of gas across Canada is over $1.80 this week, compared to $1.32 this time last year. But Canadians aren't just feeling the pain at the pump. So today we're talking to Maria Postalnyak, the Globe's Consumer Affairs Reporter. She'll break down where we're seeing these price spikes, how long they might hang around for, and how consumer behavior is already starting to shift. I'm Cheryl Sutherland, and this is the decibel from the Globe and Mail. Hi, Maria, thanks so much for joining us. Thanks so much for having me.

So Maria, the war in Iran has created huge fluctuations in the oil market, which have caused gas prices to go up. And now we're seeing the impacts on other things that we buy. We're hearing now about how this will affect air travel. So let's start there. How much have prices for a plane ticket gone up? Well, we're seeing pretty hefty increases, especially on international routes. So flights to destinations like Europe from Canada, the experts I spoke with, they are saying that we can expect. to pay about 20% more for those flights.

And in some cases even higher if you have to have a layover, if the distance is longer, for domestic flights, it's a bit less. We might see about a 5 to 10% spike or the equivalent of $50 to $100 if you're flying somewhere from, you know, Toronto to Vancouver, for example. But a big part of the issue is the volatility. I actually heard this great example from an aviation management prof that just before the war, a flight from Toronto to Delhi was about $1,000, but just a week into the conflict, that price tripled, then kind of eased to about 1,800, but it was still double the average

price just a few days earlier. So there's a lot of volatility, there's a lot of uncertainty, and prices are just changing day-to-day. They're changing incredibly quickly. That makes it very hard for a consumer to, I guess, time-ix. I think when you're flying somewhere, you kind of want to time it to get the cheapest price possible. But right now it's very difficult for a consumer. Exactly. You have no idea if, you know, tomorrow the negotiations between the U.S. and Iran resolve. And then we have the Strait of Hermuz opening. How is that going to impact costs? How is that going to impact prices? Will that increase demand? And then for a raise costs, there's still a lot of variables here that are kind of left to be determined. So the prices for flights are going up because the cost of jet fuel is increasing.

But can you give us some context on how much more it costs for a plane to fly somewhere? So jet fuel is one of the biggest operating costs for airlines. It's about 30% of their operating expenses. And those costs have surge because jet fuel prices themselves are up about 33% compared to last summer. So to put that into perspective for you, according to Wayne Smith, a hospitality and tourism professor at Toronto Metropolitan University, In late February, the cost of fuel for, let's say, a Boeing 7879 flight from Vancouver to Hong Kong, that was around 71,000. By mid-March of this year, it cost 110,000 or thereabouts. It's a big difference.

Exactly. It's huge. It's nearly like a 35% difference. And what makes it worse is that jet fuel is closely tied to the cost of crude. So about 75% of the cost of. jet fuel is tied to the cost of crude oil. In comparison for a tank of gas for your car, that's about 50%. The rest is taxes, distribution fees, sales fees, refining. But because jet fuel is taxed differently, the crude oil component makes up a much bigger portion of that price.

And as a result, when there's any change to the price of crude, we see that reflected much more quickly. We see those price jumps much more quickly. That's interesting. Okay, so because it's tied so closely to crude, the fluctuations are seen very quickly in jet fuel prices. Exactly. Maria, are airlines being transparent about the price increases on flights? Like, can consumers tell that the price increase is because of the higher price of jet fuel? Well, consumers are seeing it reflected in two ways, I would say. There's the higher ticket price overall, and in some cases, there's a separate fuel surcharge. So last week, WestJed announced they're adding a $60 fuel surcharge on packages booked with

companion vouchers from their MasterCard loyalty rewards program. And then Air Canada actually implemented a new rule this week where they have a $50 fee per passengers on some destinations for their kind of vacation packages. Air Canada Vacations is a tour company owned by Air Canada, but it's a separate legal entity. A fuel surcharge by virtue of what it is, it's something to indicate a temporary increase of a price because of some sort of an extenuating circumstance. But more often, those costs are just getting built into the overall base ticket price. And that's where things get a little bit, I guess, more vague.

We're not having that transparency. We're just seeing the cost of a ticket go up from, let's say, $500 to $600. and you're not necessarily aware that it's because of fuel or whatever other costs might be involved. What about the possibility of cancellations? Like, have any airlines indicated they'll be limiting service as a way to deal with the jet fuel demand issues? Yes, some have already announced measures around this. So, for example, airlines like Westchester are trimming their schedules slightly about 1% in April and 3% in May from what we've heard personally. and they're also combining flights and flying fuller planes.

It's really about managing fuel use and keeping costs under control. If there's a less popular route, they might kind of combine some of those carriers that are going there to save on costs. Right. Okay. Yeah, because like you said, like the fuel is 30% of operating expenses, so you want to have as full a plane as possible. Exactly. Okay, so that's air travel, which is often an optional purchase, right? So we often want to take a certain trip, but a lot of the time they're not necessary.

On the other hand, we have groceries, which are not optional, right? And we are seeing the price of food also increase. So let's talk about that. How much is the price of food being impacted by rising fuel prices? So higher energy costs really trickle down to nearly every stage of the food supply chain, everything from production to growing crops, but not everything is reflected in the grocery bill right away. But transportation costs, though, those have the most immediate impact. impact. Diesel is up about 50% since the start of the conflict, which makes transporting food

much more expensive and difficult. Because they're taking trucks and trucks use diesel. Exactly. So that shows up almost immediately in the supply chain. Oil prices obviously have surged globally. So that affects everything from farming food to processing. But transportation is still the biggest cost because things like spinach, fresh vegetables from Mexico, from Arizona. they have to be transported in these big trucks across Canada to your warehouse and to the grocery store. And that's taking up a lot of fuel, especially if it's something that needs to be refrigerated as well. That's additional fuel costs that's being factored into that price. And at the end of the day, that's going to trickle down to the consumer, the price that you're paying at the grocery store.

So do we know how much gets trickled down to the consumer? So the math on this varies, I would say, but a food economist, Mike von Masso, he told me that if transportation costs went up 5%, that would be a 0.5% increase at the grocery store, or I guess the equivalent of about $1 on every $20 of groceries. So think about it if you're spending $200, how much is that if it's $1 and every $20? It's pretty significant, right? Especially for a large family. And grocery stores, especially independent ones, they operate on very thin margins around 2%.

So when a supplier adds fuel surcharge on them, retailers often don't have a lot of room, especially the smaller ones, to absorb those costs that ends up going to you and me. Right. Mike von Massa actually was a guest on our show talking about grocery prices. He's brilliant. He's amazing, yeah. Something we also hear about because of the Strait of Hormuz being closed, is the cost of fertilizer. A lot of the fertilizer comes from that area. Will that have an impact on the price of food, the fact that fertilizer is more expensive? A really significant amount of fertilizer trade passes through the Strait of Hermuz, the same blockage that we're seeing with oil that's impacting fertilizer as well.

But the impact of fertilizer supply on the cost that we're seeing at the grocery stores or even the cost that farmers might take on, that is a bit slower to kind of trickle down the supply chain. Farm prices depend on a lot of variables like climate. depend on tariffs, and we know that there's negotiations with the USMCA happening right now. So fertilizer costs add a lot of uncertainty and can add pressure down the line. So if we continue to see the straight of her moves closed into October, that's when that kind of supply of fertilizer and fertilizer costs might start to trickle down to what we're actually seeing at the grocery store, perhaps. but in the short term, the impacts are much less, I would say significant or visible.

We'll be right back. So, Maria, it sounds like a big part of the reason we're seeing higher food prices has to do with the cost of shipping of the food. Is the situation the same across the country? Not exactly. So some regions are definitely hit harder than others, places that rely more on long-distance shipping. So like Newfoundland and Northern Ontario, they're seeing much bigger impacts from all of this. In Newfoundland, for example, you'd have to, you know, transport, let's say, spinach or citrus fruit in those trucks over these, like, large swath of land from Arizona, from Florida. And then you'd also have to factor in ferrying costs.

The good news is that, you know, as we move into the Canadian growing season, more local supply could help ease some of those pressures. But for now, those locations are definitely more kind of feeling the pain a bit more. And I guess the sense is with the growing season starting that we're having more local foods, which means they're not traveling from a longer distance. Exactly. Yeah. So if we have our own supply, then people can get fresh vegetables. They can get apples. They have more alternatives as well in Canada rather than needing to necessarily turn to imported food. We're also seeing an impact on delivery services like FedEx and Amazon. I think many people will be like, what are you talking about? So what are we seeing there? So we're seeing really big jumps in fuel surcharges there too. I would say one of the most probably shocking spikes that I've seen is for FedEx. They have this kind of standardized chart where they outline their fuel surcharges month to month.

And in February, their fuel surcharge was about 25%. And that's actually one up to 45% for anyone sending through their service. So a pretty significant jump. Amazon is also adding a 3.5% surcharge for sellers. And those costs, I guess the seller gets to decide whether they pass that onto the consumer, but we'll have to kind of assume that with all the other cost pressures that they might be facing. It's very likely that they're going to pass that on. Okay, so if someone has Amazon Prime, for example, which is supposed to cut out all of the delivery charges,

that doesn't matter. It will be coming from the actual person that's selling the item. It will come from the person selling the item, and we don't know yet if it might be added as a separate surcharge from the seller, but likely, like from what we've, I guess, seen in some similar examples, it will probably, again, go into that base cost that you're paying. So if you're buying some paint for $20, it might go up to $22. Again, whether it gets kind of packed into that overall cost or is outlined as a clear fuel surcharge, that remains to be seen. It depends on, the seller's perspective of whether this conflict is going to last into, well into summer, whether it's long term or it's a short term surcharge. We do have to talk about gas because at least one point it costs around 32% more to fill up a gas-powered vehicle than just a month ago, which is a huge increase, right? Is the cost of fuel changing the way people think about driving?

Absolutely. Yes, there are a lot of signs that is changing, or at least nudging concerns. to think differently about, you know, their vehicle, we've seen a really big jump in the interest in electric vehicles. I spoke to rates.ca, and they told me that the number of EV insurance quotes they were getting jumped 40% year over year in March. Clutch, the online car retailer, they said that their search volume for electric vehicles grew 94% from January to late March. That's a huge number. It's enormous, yeah. And sales on clutch for EVs actually doubled since early January.

So prior to the conflict in Iran, those doubled from about 5.3% of the company's total sales to nearly 10% in the past two weeks. So that's really interesting. So people are now thinking more about EVs to save on gas. Yeah. The appeal obviously is that EVs, you know, they can kind of save you in those equivalent fuel costs. I think some estimates show that they can save as much as three things. thousand dollars a year but they still come with you know higher upfront costs higher insurance costs for some models and of course you know the lack of infrastructure and challenges that we have with our climate

and kind of maintaining an EV in this kind of Canadian cold that is always still going to be something that people have in the back of their minds so we're not necessarily like we're seeing the interest surge it's it's showing some some translation into the sales but whether that last that remains to be seen. Has the government come out and said if they're going to help with these price increases? Earlier this week, Prime Minister Mark Carney actually said that his government wanted to help cushion the blow for Canadians and businesses. What that means remains to be determined, but suppliers, people in the grocery and retail

space that I've spoken with, they want to see fuel subsidies. They want to see some help from the government to take care of the strain right now and to help them pass that along to consumers to reduce prices for consumers or at least keep them low for longer. Maria, since the announcement of a two-week U.S.-Iran ceasefire deal on Tuesday, the price of oil dropped into the $95 range, and of course that can change, but this is compared to April 7th when it was at $112 per barrel. So this is quite the fluctuation, and we've seen this fluctuate as the war has gone on. Do these fluctuations have any impact on the prices we're seeing? Like, could we, for example, at this point, could we see some relief because the price has gone down a bit?

So, again, right now we're seeing this kind of two-week reprieve. A lot depends on how long the conflict continues. Let's say if we're talking about airlines, we have two weeks of this conflict being on pause. Does that mean that, you know, airfare is going to go down and cost because, you know, the cost of fuel might be seeing some reprieve? Or does that mean that we see more demand? with people thinking, okay, now I need to get my ticket in this little window when, you know, everyone's like rushing to get there, to book their travel to, you know, the end of summer or August, that might actually exacerbate some of the strain that we've been seeing and actually increase

costs. So again, there's a lot of variables here. And what happens after the two weeks, right? Like a lot depends on how long the conflict continues. If things stabilize, we could see fuel prices ease and some of these pressures come down. But if it does drag on, higher costs are likely to stick the longer that, you know, we see them. As one person told me, you know, prices, they rise like rockets and fall like feathers. They might go up fast, but when it comes to actually lowering, that will take a lot longer. Sounds like there's still a lot of uncertainty out there. A lot of uncertainty, yes. Maria, thank you so much for coming on the show. Really appreciate it. Thank you so much for having me.

That was Maria Postalniak, the Globe's Consumer Affairs Reporter. That's it for today. I'm Cheryl Sutherland. Our associate producers and interns are Finn Dermo and Emily Conahan. Our producers are Madeline White, Rachel Levy McLaughlin and Mikhail Stein. Our editor is David Crosby. Adrian Chung is our senior producer, and Angela Pachenza is our executive editor. Thanks so much for listening.