TORONTO - Consumers tired of feeling the impact of high oil prices at the pumps may be in for new headaches this year, as soaring energy prices threaten to drive up the cost of everything from airlines tickets to dry cleaning, couriers and diapers.
High oil prices, which have already increased the price of gas, fertilizers and food, may be about to hit Canadian in new areas, economists say.
Adrienne Warren, an economist at Scotiabank, says that an initial wave of increases could expand to the price of public transportation as well as household goods and services as diverse as home cleaning services and diapers.
"Through the summer and into the fall, we'll probably see increasing pressures on a wider range of goods outside of transportation such as air fares and train fares, to consumers goods in your grocery stores and your department stores."
These "rely on distribution and manufacturing that are energy-intensive and that will put more pressure on the retailers to pass the costs that they're facing on to the consumers," Warren said.
While the price of a big-screen TV is unlikely to change because such electronics are often manufactured outside of Canada and benefit from the strong loonie, services such as dry cleaning, carpet cleaning, car rentals and couriers could all increase.
"A large part of their costs comes from transportation, going from home to home, or energy use," she said.
On Wednesday, Dow Chemicals Co. became the latest in a series of companies to announce price increases because of the high cost of energy. The Michigan company, which makes chemical, plastic and agricultural products, said it had seen a fourfold increase in the price of raw materials over the last six years.
Dow's announcement came a day after Nova Scotia Power said it had applied for a rate increase of just under 12 per cent. The province's electric utility said it needed the extra money to cover soaring fuel prices.
Earlier this month, Air Canada (TSX:AC.A) imposed domestic fuel charges that would add $120 a round-trip for flights of more than 1,601.6 kilometres each way, while Kimberly-Clark Corp. (NYSE:KMB) said it would raise prices for Huggies diapers, Pull-Ups training pants, Cottonelle and Scott bathroom tissue, Viva towels and Kleenex facial tissue by as much as eight per cent.
But it's still too early to be stockpiling any goods just yet, said TD economist Craig Alexander.
"Up to this point, we really haven't seen the traditional pass-through that has been characteristics during previously oil price shocks," he said, noting the increases haven't fed through to goods such as clothing and footwear.
"Markets have been very competitive, and so as a result, businesses have not been willing to pass along the end result to the consumer."
Doug Porter, a senior economist with the Bank of Montreal, said inflation on consumer goods has thus far been "relatively limited."
"For some of the price increases to stick, you'd need solid underlying economic momentum, which I don't think is a given in Canada, and certainly not in the U.S. over the next year," Porter said.
"But we're at risk, if oil prices continue moving higher, of it becoming a little bit more of a serious inflation risk for the broader economy."
