A cyclist rides past the Bank of Canada building in Ottawa, Ont., on May 8, 2025. Blair Gable/Reuters
Canadians under 35 years of age have yet to recover from higher inflation seen during the COVID-19 pandemic, while older Canadians have fared better, according to a new Bank of Canada report.
“A large number of Canadians continue to view their budgets as stretched even though inflation has slowed since the pandemic,” researchers wrote in a Sept. 24 report, adding that these concerns are “valid and reflect an important reality.”
The Bank of Canada report, which was first covered by
Blacklock’s Reporter,said “younger” households, meaning those under age 35, saw additional spending exceed additional income in 2025, relative to pre-pandemic trends. Their incomes were an average of $5,369 above their pre-pandemic trend, while their spending was $9,618 higher, resulting in a $4,249 shortfall.
By contrast, the other age groups saw additional income exceed additional spending in 2025. Households headed by people aged 35 to 44 had an income-spending gap of $1,335, while those aged 45 to 54 had a $1,781 surplus. Households aged 55 to 64 had a $169 surplus, and those 65 and older had a $618 surplus.
The report said younger and lower-income households spend relatively more on food and shelter than older and higher-income Canadians. It noted that “prices in these categories remained well above their pre-pandemic trends in 2025,” helping explain the negative gaps for those households.
Inflation rose sharply in Canada and around the world during the pandemic recovery. The Bank of Canada has said that a combination of high energy and food prices, supply chain disruptions, and higher demand for services following the end of pandemic lockdowns led to higher inflation.
In Canada, inflation reached 8.1 percent in June 2022, its highest level in nearly 40 years, prompting the Bank to raise interest rates in a bid to curb rising prices.
The report noted that while inflation has since fallen,
now sittingat around 3 percent, this “does not erase the effects of higher prices that households have had to absorb since the pandemic began.”
The report said improving affordability would depend partly on increasing incomes, and that higher productivity in the economy would “help in this regard by contributing to stronger gains in incomes and living standards without adding to inflationary pressures.”
A 2024 study from the Environics Institute found that 39 percent of Canadians said they were financially worse off than their parents, while 40 percent said they were better off. The 39 percent figure was the highest recorded since the question was first asked in 1990.
Among younger Canadians, 54 percent of those aged 18 to 29 and 51 percent of those aged 30 to 44 said they were financially worse off than their parents. Among those aged 45 to 59, 45 percent said they were worse off, compared with 21 percent of those aged 60 and older.
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