More Canadians say necessities such as food, housing and transportation are less affordable

The Rising Cost of Living in Canada: A Deep Dive into the Affordability Crisis

More Canadians say necessities such as food, housing and transportation are less affordableCanadian citizens are grappling with an escalating cost of living crisis, as necessities like food, housing, and transportation are becoming less affordable. This article delves into this pressing issue, highlighting the impact on citizens’ wallets and the broader Canadian economy.

Overview of the Affordability Crisis

There is a growing concern among Canadians about the rising cost of essential commodities. The report indicates that life’s necessities are becoming less affordable for an increasing number of Canadians, with a notable impact on their financial comfort.

The Impact on Basic Necessities

From feeding themselves and their families to saving money, the cost of living continues to skyrocket for many. Here’s a breakdown of how Canadians are feeling the pinch:

  • Food: 52% (+5pts from December 2021)
  • Savings: 49% (+5pts)
  • Transportation: 45% (+9pts)
  • Housing: 37% (+2pts)
  • Clothing and household necessities: 45% (+5pts)

These figures suggest that more Canadians are allocating a larger portion of their income to cover basic needs, leaving less financial buffer to weather interest rate hikes.

The State of Disposable Income in Canada

Despite a slight decrease in the number of Canadians nearing insolvency (46%,-6pts from last quarter), the average Canadian has less disposable income as they shell out more for life’s necessities. The amount an average Canadian has left over at the end of the month decreased by $37 from the previous quarter to $654.

Demographic Impact: The Young and the Renters

Some demographic groups are feeling the squeeze more than others. Younger Canadians (18-34 years) have seen the most significant decrease in their average month-end finances, dropping by $273 to $606.

Moreover, renters and low-income households are particularly vulnerable to the rising interest rates and cost of living. Renters are more likely than homeowners to be concerned about the impact of rising interest rates on their financial situation (34% of renters vs. 29% of owners). Renters also express more concern about their ability to repay their debts (63% of renters vs. 48% of owners), and are more fearful that rising rates could move them towards bankruptcy (45% of renters vs. 27% of owners).

The Affordability Crisis by Income Brackets

The affordability crisis is not evenly distributed among income brackets. Canadians with a household income of less than $40K are the most affected by the interest rate increases and are more concerned about their ability to repay their debts. They are also the most likely to be anxious about impending financial trouble or bankruptcy due to rising interest rates. Here’s a detailed sentiment breakdown by income bracket:

Table 1: Sentiment by yearly household income level

Income Bracket Feeling the effects of interest rate increases Impact on the ability to repay debts Rising rates leading to financial trouble Closer to bankruptcy due to interest rates
<$40K 62% 60% 59% 44%
$40K – <$60K 53% 51% 46% 34%
$60K – <$100K 57% 52% 44% 32%
≥ $100K 55% 52% 44% 29%

A Glimmer of Optimism

Despite the financial strain, some Canadians are optimistic about their personal debt situation. More rate their personal debt situation as excellent (43%, +5pts) and fewer rate it as terrible (14%, -4pts). Three in 10 still expect their debt situation will improve a year from now, but fewer now believe it will worsen (11%,-4pts).

Cautious Optimism or False Hope?

While there’s optimism, it’s important to proceed with caution. The long-term effects of interest rate hikes may yet to be fully felt, and we may be witnessing a false sense of optimism.

A Closer Look at Budgets

As the economic situation in Canada continues to unfold, households are advised to examine their budgets closely. If the rising costs of daily purchases and debts continue, Canadians may need to resort to more debt to cover their bills.

Seeking Professional Help

In such circumstances, reaching out to a Licensed Insolvency Trustee for an unbiased assessment of their financial situation and exploring debt-relief options could be beneficial.


The rising cost of living is having a marked effect on Canadians, making necessities such as food, housing, and transportation less affordable. As the situation unfolds, it remains crucial to monitor the economic climate and seek professional help when necessary.

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