Cost of Living continues to Rise in Canada

We share many things as part of the Canadian experience: cold winters, street hockey in our neighbourhoods, and, more than ever, a tight personal budget. 

Across Canada, the cost of living has blown the household budget of most Canadians out of the water. From grocery bills to gas prices, general goods to housing, Canadians can’t remember a time when the cost of living took such a sharp turn in the wrong direction. 

The Bank of Canada saw a year of inflated prices coming, projecting a peak increase of the CPI (Consumer Price Index, which weighs the average price for a basket of goods) at 2 per cent. From May 2022 to May 2023, the CPI increased by 3.5 per cent nationally. The highest level hit recently was 8.1 per cent in June of 2022. While inflation continues through 2023, it is worth noting that 2022 was a harder year for cost increases after the initial scrouge of inflation began in 2021. 

In April 2022, nearly three-quarters of Canadians reported the increasing cost of living was beginning to affect their ability to pay their regular bills on time. At the same time, 30 per cent of Canadians polled said they were worried they would not be able to afford their rent or mortgage. This increased to 44 per cent of Canadians by autumn, when a quarter of Canadians said they could not afford an unexpected expense costing $500. 

One place Canadians have been feeling the recent wave of inflation has been in grocery stores. The predicted increase in food costs was between 5 to 7 per cent through 2023. In actuality, grocery prices have increased 9 per cent from 2022 to 2023. This added nearly $2,000 of food expenses to the average Canadian household in a year. 

Some suspect that plain greed is partly to blame for the increased cost of living. Many large-scale producers have been accused of changing recipes for various products to cheaper alternatives while simultaneously increasing prices. 

Part of the blame for this massive and continued increase in food costs comes from damaged or underperforming crops nationally and south of the border. As climate change continues to wreak havoc across the globe, spells of drought and several months of rain in just a few days have been ruining farmers’ businesses while increasing the grocery cost for Canadians. In addition to lost crops, farmers face a cost crisis insofar as their operating costs. With the unpredictable weather has come sharp increases in the price of grains for livestock.  

The cost of diesel and gas are part of the plight as well, for farmers and consumers alike. The national average cost of diesel in Canada is $1.86 per litre, while the average cost for a litre of gas has risen to $1.91. Both figures are approximately 27 per cent higher than that seen in the United States and 32 per cent higher than prices in Europe. It is worth noting that in May 2023, gas prices were over 18 per cent lower nationally than they were in May 2022. This is partially due to a fuel cost spike seen after the Russian invasion of Ukraine in February 2022. 

Twenty-First Century Home Ownership 

While these day-to-day expenses grow worse, the housing market has become a blistering storm. While it has created an incentive to sell, the first-time home buyer has never had more difficulty finding a home. 

Across the country, the average price for a home is $729,000 as of May, an increase of 3.2 per cent compared to May 2022. In addition to already high prices, the amount of houses available for purchase across the country is low, leading many to expect the high cost of housing to grow in the coming months and years. With low supply comes high demand, and with high demand comes a seller’s market in which buyers must overpay. While mortgages have become increasingly difficult for first-time homeowners to acquire, the incentive to invest one’s life savings in a home at a time with such steep prices has many determined to wait out the storm. The question becomes whether enough housing will be built in the next 5 to 10 years to help flatten the curve of rising property value.

At the same time, many argue the quality of modern houses is much less than the listing price indicates. With cheaper materials and cookie-cutter architecture, neighbourhoods across the country are being built with haste and cost-effectiveness as the goal while being sold with the same price tag as something built 25 years ago. 

Several sources indicate that new houses are built so improperly today that they are less durable in the case of a house fire. It is no industry secret that modern homes, built in the last 10 to 15 years using modern practices and materials, can burn up to twice as fast as buildings constructed 25 or more years ago.  

According to Fire Engineering, a website about news, research and other pertinent information in the fire safety industry, “legacy wood frame” construction type buildings, an outdated style, are significantly more structurally sound in the case of fire compared to modern methods. Whereas a legacy model will remain structurally sound for 18 to 20 minutes in a fire, a modern building “can begin to lose its structural integrity in as quickly as four to eight minutes from the start of a fire.” 

Changes in construction styles have led to “larger void spaces” in houses within which a fire can grow, which causes “early collapse potential unfound in older structures.” 

Keys to the Low Tide and High Prices 

As for what might help at a time as expensive as this, there are many things consumers can consider. Simple ideas, beginning with re-examining one’s household budget to eliminate unnecessary and unwanted costs. 

The average consumer spends between $130 and $200 on monthly subscriptions. Meanwhile, the same consumers assume they spend closer to $85 monthly on subscriptions. Many of these subscriptions may have been forgotten, while others may have been free trials, which turned into monthly charges. Apps like Rocket Charge and Subby can help consumers see how many monthly subscriptions they have and what these monthly charges add up to. 

Reducing food waste at home is another key way to prevent grocery bills from growing. According to a study by the National Zero Waste Council, Canadian households will throw away approximately 280 lbs of food each year. By their estimates, two-thirds of that food was edible when discarded. The Council advises meal planning for Canadians to ensure there is less wasted product. 

Another key to saving in these tough times is rapidly paying down expensive debt. High interest rates on credit cards can add hundreds, perhaps thousands, of dollars to an individual’s yearly expenses if small or minimum payments are being made monthly. Eliminating these debts rids consumers of charges they cannot afford to keep while the additional money saved on interest rates and service fees will add up quickly. 

– Matthew Harrison, U Multicultural