Average Living Standards in Decline Due to Inflation Pressures: Statistics Canada

People wait in line to enter a clothing store in a shopping mall in Montreal on Jan. 15, 2022. (The Canadian Press/Graham Hughes)

Inflationary pressures are causing average living standards in Canada to fall despite an overall increase in wages, says a new Statistics Canada report.

“High inflation especially for food products has put a severe strain on living costs especially among more vulnerable households as income and saving levels adjust to the withdrawal in pandemic-related supports,” said the report, titled “Research to Insights: Consumer price inflation, recent trends and analysis.”

“Despite higher wages and earnings, most workers have seen their purchasing power decline as inflationary pressures ramp up.”

Published on Feb. 22, the report found that average hourly wages across Canada measured year-over-year were up over five percent in December 2022 and average weekly earnings rose by more than four percent in the 12 months prior to November 2022.

However, the federal agency says the increased wages are still insufficient to keep pace with rising inflation.

“Increases in the cost of living are having a negative impact on net saving and wealth especially for more vulnerable households,” said StatCan, as first reported by Blacklock’s Reporter.

“Low and middle income households have seen large reductions in their net savings while younger households have become more leveraged.”

The report noted that average food prices rose by nearly 15 percent between January 2021 and December 2022, which is far higher than the cumulative increase of around nine percent between 2015 and 2019.

“Canadian food prices are growing at their fastest pace in 40 years,” says the report.

Rising prices associated with gasoline and housing have also contributed to higher all-around living costs, says the report.

It adds that rental accommodation prices have risen in 19 of the past 24 months, which comes along with mortgage interest costs increasing by 18 percent in the 12 months leading up to December 2022.

“Housing affordability deteriorated markedly during the second and third quarters of 2022 as borrowing costs rose,” says the report, adding that utility costs have also risen “largely because of rising household fuel and natural gas prices.”

Inflation

The report says that inflation is currently at a 40-year high and that consumer inflation “accelerated to its fastest pace in four decades” last summer, peaking in June at around eight percent.

It notes that inflationary pressures have not been equal across all provinces, with Prince Edward Island and Manitoba posting the largest annual average price increases in 2022.

Another federal agency previously reported that almost 40 percent of Canadians have been borrowing money recently to cover their daily expenses.

The Financial Consumer Agency of Canada said in a November 2022 report that 38 percent of Canadians were borrowing money to cover grocery and rent costs, among other daily expenses, as of September 2022.

It also wrote that the “proportion of Canadians who used online lenders or payday loans more than tripled from August 2020 to September 2022.”