A Distributional Analysis of the Purchasing Power of Canadian Households Since 2019

Communications

Quotes

• Based on our analysis, the price of the basket of goods and services has increased by 15% since 2019, but disposable income has increased by 21%, supported by government transfers, wage gains and net investment income, thereby improving the purchasing power of most Canadian households.

• While disposable income has, on average, increased for households at all income levels from the pandemic, since 2022 rising inflation and tighter monetary policy have reduced purchasing power for lower-income households.

News Release

{"id":67,"created_at":"2024-10-07T13:02:09-04:00","updated_at":"2024-10-08T08:57:02-04:00","slug":"impact-of-rising-inflation-and-higher-interest-rates-on-household-purchasing-power-varies-by-income-says-pbo-limpact-de-la-montee-de-linflation-et-des-taux-dinteret-sur-le-pouvoir-dachat-varie-en-fonction-des-revenus-selon-le-dpb","title_en":"Impact of rising inflation and higher interest rates on household purchasing power varies by income, says PBO","title_fr":"L\u2019impact de la mont\u00e9e de l\u2019inflation et des taux d\u2019int\u00e9r\u00eat sur le pouvoir d\u2019achat varie en fonction des revenus, selon le DPB","body_en":"The Parliamentary Budget Officer (PBO) has released an analysis of inflation and Canadian household incomes since the start of the COVID-19 pandemic. The analysis also includes a portrait of purchasing power at the provincial and territorial level.\n\nCOVID-19 disruptions had a major impact on the price of goods and services, and therefore on household purchasing power. In 2021, commodity prices and supply chain disruptions drove up the price of consumer goods, but in 2022 inflation accelerated and became more widespread. Consumer Price Index (CPI) inflation reached an all-time high of 8.1% in June 2022.\n\n\u201cBased on our analysis, the price of the basket of goods and services has increased by 15% since 2019, but disposable income has increased by 21%, supported by government transfers, wage gains and net investment income, thereby improving the purchasing power of most Canadian households,\u201d said PBO Yves Giroux. \n\nHouseholds in the top two income quintiles saw their incomes rise three times faster than those in the bottom two quintiles. This is partly due to higher wage growth for these households. As well, rising interest rates have increased investment income, offsetting interest payments for higher-income households.\n\n\u201cWhile disposable income has, on average, increased for households at all income levels from the pandemic, since 2022 rising inflation and tighter monetary policy have reduced purchasing power for lower-income households,\u201d added Giroux.\n\nAs for purchasing power in the provinces, Quebec, Ontario and British Columbia saw theirs increase, while Newfoundland and Labrador, Nova Scotia and Alberta saw theirs decrease as inflation outpaced income growth. In the territories, household purchasing power has increased significantly since late 2019.","body_fr":"Le directeur parlementaire du budget (DPB) a publi\u00e9 une analyse de l\u2019inflation et des revenus des m\u00e9nages canadiens depuis le d\u00e9but de la pand\u00e9mie de la COVID-19. L\u2019analyse inclut aussi un portrait du pouvoir d\u2019achat au niveau provincial et territorial.\n\nLes perturbations li\u00e9es en pand\u00e9mie de COVID-19 ont eu d\u2019importantes r\u00e9percussions sur le prix des biens et services et donc sur le pouvoir d\u2019achat des m\u00e9nages. En 2021, le prix des mati\u00e8res premi\u00e8res et les perturbations des cha\u00eenes d\u2019approvisionnement ont fait augmenter les prix des biens de consommation, mais c\u2019est en 2022 que l\u2019inflation s\u2019est acc\u00e9l\u00e9r\u00e9e et est devenue g\u00e9n\u00e9ralis\u00e9e. L\u2019inflation de l\u2019indice des prix \u00e0 la consommation (IPC) a atteint un sommet historique de 8,1 % en juin 2022.\n\n\u00ab Selon notre analyse, le prix du panier de biens et services a augment\u00e9 de 15% depuis 2019, mais le revenu disponible a cr\u00fb de 21 %, soutenu par les transferts gouvernementaux, les gains salariaux et les revenus de placements nets, am\u00e9liorant ainsi le pouvoir d\u2019achat de la plupart des m\u00e9nages canadiens \u00bb, explique Yves Giroux, DPB. \n\nLes m\u00e9nages des deux quintiles sup\u00e9rieurs ont vu leurs revenus augmenter trois fois plus vite que ceux des deux quintiles inf\u00e9rieurs. Cela s\u2019explique en partie par une plus forte croissance des salaires pour ces m\u00e9nages. De plus, la hausse des taux d\u2019int\u00e9r\u00eat a augment\u00e9 les revenus d\u2019investissement, contrebalan\u00e7ant les paiements d\u2019int\u00e9r\u00eat pour les m\u00e9nages les plus riches. \n\n\u00ab Bien que le revenu disponible ait, en moyenne, augment\u00e9 pour les m\u00e9nages \u00e0 tous les niveaux de revenu \u00e0 partir de la pand\u00e9mie, depuis 2022 la hausse de l\u0027inflation et le resserrement de la politique mon\u00e9taire ont r\u00e9duit le pouvoir d\u0027achat des m\u00e9nages \u00e0 faible revenu \u00bb, a ajout\u00e9 M. Giroux.\n\nPour ce qui est du portrait provincial du pouvoir d\u2019achat, le Qu\u00e9bec, l\u2019Ontario et la Colombie-Britannique ont vu celui-ci augmenter, tandis que Terre-Neuve-et-Labrador, la Nouvelle-\u00c9cosse et l\u2019Alberta ont connu une baisse, \u00e0 cause d\u2019une inflation sup\u00e9rieure \u00e0 la croissance des revenus. Dans les territoires, le pouvoir d\u2019achat des m\u00e9nages a fortement progress\u00e9 depuis la fin de 2019.","release_date":"2024-10-08T09:00:00-04:00","is_published":"2024-10-08T08:57:02-04:00","internal_id":"COM-2425-067","permalinks":{"en":{"website":"https:\/\/www.pbo-dpb.ca\/en\/blog\/news-releases--communiques-de-presse\/impact-of-rising-inflation-and-higher-interest-rates-on-household-purchasing-power-varies-by-income-says-pbo-limpact-de-la-montee-de-linflation-et-des-taux-dinteret-sur-le-pouvoir-dachat-varie-en-fonction-des-revenus-selon-le-dpb"},"fr":{"website":"https:\/\/www.pbo-dpb.ca\/fr\/blog\/news-releases--communiques-de-presse\/impact-of-rising-inflation-and-higher-interest-rates-on-household-purchasing-power-varies-by-income-says-pbo-limpact-de-la-montee-de-linflation-et-des-taux-dinteret-sur-le-pouvoir-dachat-varie-en-fonction-des-revenus-selon-le-dpb"}},"pivot":{"publication_id":822,"news_release_id":67}}