Canadian Households Fall Behind as Inflation Erodes Buying Power

The Bank of Canada's research shows that most Canadian households are running a deficit to meet their expenses, despite incomes beating inflation from 2020 to 2025.

The average household spent $6,500 more on average between 2020 and 2025, but income grew by an average of $7,400, leaving a $900 annual surplus. However, the average is hiding the budget pressures most households are facing.

Between 2022 and 2024, inflation caused spending to exceed income, flipping the gap into negative territory. Although inflation eased in 2025, it didn't change the narrowing of the gap already created.