Why Canadians Are Barely SURVIVING, Forget About Thriving
It’s January 2025, and many Canadians find themselves making an impossible choice. Between skyrocketing grocery bills, increased rent, and huge utility payments, many have to decide which of these bills will get paid this month. Unfortunately this reality is shared by millions of Canadians.. the cost of living has spiraled out of control, and too many of us are struggling to make ends meet.
Canada, known for its high standard of living and robust social safety nets, now finds itself grappling with a crisis of affordability. From soaring grocery prices to unaffordable housing, the financial strain on individuals and families is palpable. Headlines about inflation, interest rates, and food banks dominate the news, and leave us with a tangible feeling of distress, anxiety and hopelessness about the future. In this blog, we’ll explore the roots of Canada’s cost of living crisis, break down the factors contributing to financial hardship, and examine the steps needed to address this pressing issue.
Breaking Down the Crisis
1. High Inflation Rates: A Silent Erosion of Wealth
Inflation has become a defining feature of Canada’s economic landscape. Since the COVID-19 pandemic, food prices have surged by an average of 21.7%, with dining out costs increasing by 28.5%. For households already living paycheck to paycheck, these increases are devastating. Statistics Canada reports that grocery staples like meat, dairy, and fresh produce have seen some of the sharpest price hikes, forcing families to make difficult trade-offs.
While inflation affects everyone, its impact is disproportionately felt by lower-income households, which spend a larger share of their income on necessities. Wage growth, meanwhile, has failed to keep pace, further exacerbating the financial strain.
2. Stagnant Wage Growth
Despite a tight labor market in some sectors, wage growth in Canada has been sluggish. Over the past decade, wages have failed to keep pace with the rising cost of living. For example, while grocery prices have risen by over 20%, average wages have only increased by a fraction of that. This growing disparity has eroded purchasing power, leaving many workers feeling as though they are running in place financially and never pulling ahead.
3. The Housing Affordability Crisis
Housing—a fundamental human need—has become a luxury for many Canadians. Home prices remain at historically high levels, and rental costs have followed suit. Cities like Toronto and Vancouver, already infamous for their housing markets, have seen rental prices increase by double digits year-over-year. The influx of immigrants, coupled with limited housing supply, has intensified demand, pushing affordability further out of reach.
For prospective homebuyers, rising interest rates have compounded the problem. Monthly mortgage payments have surged on record high mortgages, making home ownership an unattainable dream for many. Even those who already own homes are feeling the pinch as variable-rate mortgages climb higher.
4. Rising Interest Rates: A Double-Edged Sword
In an effort to curb inflation, the Bank of Canada has implemented a series of interest rate hikes. While higher rates can help stabilize prices in the long term, they have immediate consequences for borrowers. Canadians with variable-rate mortgages have seen their monthly payments soar, while those carrying credit card debt are facing higher interest charges.
For businesses, rising rates mean increased borrowing costs, which can stifle investment and slow economic growth. The cumulative effect is a challenging environment for both consumers and the broader economy.
5. Increased Reliance on Credit
With wages stagnating and living costs soaring, Canadians are increasingly turning to credit to bridge the gap. Household debt levels have reached alarming heights, with many using credit cards to cover everyday expenses like groceries and utility bills. While this provides temporary relief, it’s a dangerous cycle that leaves families vulnerable to financial shocks and mounting interest payments.
According to a recent report, nearly half of Canadians are $200 or less away from insolvency at the end of each month. This growing reliance on credit is a symptom of deeper systemic issues—a lack of affordable options and adequate financial support.
6. Energy Costs: A Compounding Factor
Energy costs have also surged, further straining household budgets. Since the pandemic, energy expenses have risen by 30%, affecting everything from home heating bills to transportation costs. For Canadians living in colder regions, where heating is a necessity rather than a choice, these increases have been particularly burdensome.
7. Food Bank Usage at Record Highs
As the cost of living continues to climb, more Canadians are turning to food banks for support. In March 2023, food banks across the country reported serving nearly 2 million people—a staggering 32% increase from the previous year. What’s even more troubling is that many of these users are employed individuals who simply cannot stretch their paychecks far enough.
The rise in food bank usage is a stark indicator of the growing financial precarity faced by Canadian households. It’s a reality that underscores the inadequacy of current social support systems.
8. Poverty Rates and Economic Inequality
Canada’s poverty rates paint a grim picture: approximately 25% of Canadians are living below the poverty line. This means that one in four people struggles to afford basic necessities like food, housing, and healthcare. Economic inequality has widened, with wealth increasingly concentrated among a small segment of the population.
This growing divide not only undermines social cohesion but also stifles economic growth. When a significant portion of the population is unable to participate fully in the economy, everyone loses.
9. Government Spending and Debt
Government spending has expanded to nearly half of GDP, reflecting significant investments in public services and pandemic recovery measures. However, this has also contributed to growing public debt levels. Public sector workers, who make up one-third of Canada’s workforce, enjoy a 30% premium in salary and benefits compared to their private sector counterparts. This disparity has sparked debates about fairness and the sustainability of government spending.
10. Economic Divergence from the U.S.
Canada’s economic performance has also lagged behind its southern neighbor. Per-capita national income has fallen to approximately 70% of U.S. levels, down from 80% five years ago. This divergence reflects broader structural challenges, including lower productivity growth and a reliance on resource-based industries.
How can we turn the tide?
The 2025 cost of living crisis in Canada is a multifaceted issue with no easy solutions. It’s a crisis that touches every corner of the country, affecting families, businesses, and communities. From soaring inflation and housing costs to rising reliance on credit and food banks, the challenges are both vast and deeply personal.
On January 6th, 2025, Justin Trudeau resigned as the Prime Minister of Canada after being in power for almost a decade. His departure leaves many Canadians hopeful that change will happen quickly, but with anxiety about the choices ahead. Addressing this crisis will require bold action from policymakers, businesses, and individuals alike. Governments must prioritize affordable housing, strengthen social safety nets, and implement measures to address wage stagnation. Businesses have a role to play, too, by investing in their workers, increasing stagnant wages and fostering sustainable economic growth. And for individuals, the call to action is clear: advocate for change, support local initiatives, and share stories that highlight the urgency of this issue.
Together, we can work toward a Canada where no one has to choose between feeding their family and keeping a roof over their head. Let’s see what 2025 will bring.
