Germany, which holds this year's G7 rotating presidency, is hosting the gathering of the heads of state and government of the world's seven leading industrialized nations from Sunday through Tuesday.
"Russia's brutal war against Ukraine is also having an impact here," Scholz said in his video podcast on Saturday, pointing to steep rises in the prices of food and energy.
"Many things we buy are more expensive. Food, but especially the prices for energy. We notice that at the petrol station, we notice that when we have to pay the heating bill. Heating oil, gas — everything is much more expensive than a year ago," he said, adding: "That's why we have to prepare for it."
The chancellor said the G7 leaders would discuss the current situation triggered by the war "and at the same time ensure that we stop man-made climate change."
He stressed the need for a "climate club" to enable countries to work together to combat climate change as well as the current geopolitical and inflation crises.
Still, Scholz sought to lower expectations for the meeting, saying: "We won't move mountains."
The G7 club includes the United States, the United Kingdom, Canada, France, Italy, Japan and Germany.
Their meeting comes in the midst of Russia's invasion of Ukraine, which has triggered a geopolitical crisis, food security issues in parts of the world and prompted many countries to impose sanctions on Russia.
Meanwhile, thousands of demonstrators gathered in Munich on Saturday to protest the lack of adequate G7 action on issues like the phaseout of fossil fuels, preservation of biodiversity and the fight against global hunger.
Luisa Neubauer, one of the founders of Germany's Fridays for Future climate movement, told DW that many politicians "don't want to or cannot understand" the climate emergency.
"Honestly, I don't know what political leaders are looking at and what not, but what it seems like from the outside is that obviously many of them don't want to or cannot understand the emergency we are in," she said, adding that "reacting to a fossil fuel war with more fossil fuels, it just doesn't make sense, even on a geopolitical level."
She called on G7 leaders to turn away from fossil fuel by sticking to the deal on ending foreign funding for fossil fuels and committing to a coal exit by 2030, in addition to fulfiling commitments related to the loss and damage financing for economically weaker countries.
On the issue of Germany deciding to reactivate coal-fired power plants to break free from its dependence on Russian oil and gas and fill gaps in energy supply, she said: "It's a dilemma that, you know, societies everywhere are in and especially the German society, as we're just so dependent on Russian gas and oil."
Neubauer acknowledged there are big questions on how to fill the gaps in the energy systems, but warned there was still "a huge difference between filling in gaps and creating new, lengthy, long-lasting dependency on fossil fuels and their autocrats."
Police said they were expecting at least 20,000 protesters in the Bavarian city.
Authorities have deployed about 18,000 police officers around the summit site and the protests.
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