Canadian households are feeling the squeeze as inflation rises

The latest inflation data shows that the cost of living in Canada was up 3.6% in May compared to a year earlier, the highest rate in a decade.

A new report from Angus Reid shows that most Canadians are spending more, and some are really feeling the burden of rising prices.

While the Bank of Canada recently noted that, although inflation is way above its 2% target, the annual rise is distorted by a slump in prices in the early months of the pandemic.

That said, the latest figures that were released Wednesday by Statistics Canada also show a slightly higher pace of increase month-over-month than had been expected (0.5% compared to 0.4%).

Core inflation was up to 2.3% year-over-year from 2.1%.

The Angus Reid report reveals that more than 9 in 10 respondents have noticed higher costs when filling their tank with gas and –most concerning for family budgets – buying groceries.

For homeowners, 96% said the cost of renovations was higher while 95% said potentially buying a home was more expensive and more than half of renters say their monthly cost has increased too.

When factors such as rising house prices and the labour market are considered, one third of respondents said they are worse off now than 12 months ago, with just 20% saying they are better off and 45% reporting no change.

The study shows that those in Alberta (45%) and Saskatchewan (43%) are the most likely to report being worse off than a year ago while those in Ontario (23%) and B.C. (22%) are the most likely to say they are better off.

Looking ahead

Asked about their personal financial futures, there was a close split between those that expect improvement and those who are fearing worse to come.

Almost one quarter (24%) of respondents believe they will be better off in a year compared to the 21% who expect to be worse off.

Those in lower income households (less than $25K) are most likely to feel pessimistic while those with six figure incomes are most likely to be optimistic.