This article was last updated on April 16, 2022
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A report issued by the National Bank of Canada has found that the difference between Canadian and U.S. gasoline prices has reached an all-time high. According to the report, the percentage of retail spending that Canadians put towards gasoline is above 13 per cent, i.e. almost an all-time high itself, while in the U.S. the percentage is just over 10 per cent.
In its report, The National Bank of Canada has highlighted the high cost of gas to be one of the key “restraining” factors in the economy because it leaves less cash for Canadian households to spend on other items. Additionally, it was pointed out that it previously contributed to a “soft” first quarter when it comes to overall retail sales. The National Bank of Canada’s senior economist, Krishen Rangasamy, mentioned in a client note released on May 22 to “note that the gasoline share in total retail spending was close to record highs in the first quarter, in sharp contrast to the declining share seen south of the border.” Rangasamy highlighted that the high cost of gas is acting as a “tax hike” on the consumer in the first quarter.
Previously, BMO economist, Sal Guatieri, projected that Canadians are paying 30 per cent more for gas than Americans. He elucidated that “although U.S. gasoline prices have risen 10 per cent this year, they remain within the relatively narrow band established in the past three years.” Guatieri added that “Canadian drivers haven’t been as lucky of late, no thanks to a weaker loonie.”
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