Filling up your car, taking a trip, even buying groceries could get considerably more expensive as oil continues its climb toward $100 US a barrel.
Today's crude oil prices hover around $90 US a barrel, up from an average $79 in 2010.
Oil analyst Jeff Rubin and economists at Goldman Sachs expect oil to rise above $100 a barrel this year as global economic fundamentals improve, demand from emerging markets soars and the aftermath of the BP oil spill limits offshore drilling.
Gas prices are averaging $1.13 a litre today in Canada.
"Will that continue to rise? There's certainly an upside risk to that," said TD economist Francis Fong.
The bank expects ward pressure on inflation, or the general cost of living, in the early months of 2011.
Overall energy prices in Canada already increased 6.7% in the 12 months ending in November, following a 9.1% gain for October, according to the latest set of data from Statistics Canada.
People are doing pretty well in Canada relative to their international counterparts and that tends to have just as much of an impact on inflation as rising crude oil costs, Fong said.
TD expects headline consumer prices to come in well above 2% for most of the year. Core inflation, which strips out volatile energy prices, should sit closer to the Bank of Canada's 2% target. lockstep with crude oil making shipping things such as food more expensive.
In its latest earnings report, Loblaw said its profits were offset by increases in transportation costs.
Airlines are also showing a reluctance to compete for recession-weary travellers on Canada's WestJet, have begun to lure customers with value-added items such as additional flights, better food and more legroom.
Qantas, Australia's largest airline, said Thursday it expects an industry-wide rise in airfares to help offset soaring oil prices.
Qantas may hike prices and fuel surcharges if its global Executive Alan Joyce said.
"The fuel price has gone up considerably, so I think it's in every airline's interest to recover these costs," Joyce said in an interview with Reuters.
"It is a two-edged sword because rising fuel prices are indicative of a rising economy."
