Most Canadian Households Now Run A Deficit To Meet Inflation: BoC

Canadian households may not acknowledge it publicly, but they’re falling behind. Bank of Canada (BoC) research shows incomes beat inflation from 2020 to 2025. But the researcher warns there’s a catch, as the average often cited by policymakers is an average. Most households didn’t beat inflation, and are now racking up debt every year to meet their expenses. The problem is amplified for those who are young, poor, or—wait, own a home? Canadian Household Expenses Are Rising Faster Than Incomes Household bills have climbed aggressively, but so has income—at least at the headline. From 2020 to 2025, the research found households spent $6,500 more on average. Over the same span, incomes grew an average of $7,400, leaving a $900 annual surplus. That’s not ideal, but at least it’s positive. Unfortunately, the average is hiding the budget pressures most households are facing. The 2022 to 2024 inflationary shock led to a persistent erosion in buying power. Spending exceeded income, flipping the gap into negative territory. By 2025, inflation calmed and income surpassed spending again, but only by $274. “Spending growth did outpace income gains between 2022 and 2024 as elevated inflation pus...