How does carbon tax affect prices?

Can you explain how a carbon tax impacts the prices of goods?

Sure! A carbon tax increases the cost of fossil fuels, which can lead to higher production costs for goods that rely on these fuels.

Does this mean that everyday items will become more expensive?

Yes, generally, as production costs rise, companies may pass those costs onto consumers, leading to higher prices for everyday items.

Are there any exceptions to this?

Yes, some companies may absorb the costs to remain competitive, or governments might subsidize certain essential goods to keep prices stable.

How does this affect low-income households?

Low-income households may feel the impact more acutely, as they spend a larger portion of their income on energy and basic goods.