What happened
A recent report from the Bank of Canada found that Canadians under the age of 35 have not yet recovered from the higher inflation experienced during the COVID-19 pandemic. In contrast, older Canadians have fared better. The report noted that many Canadians still view their budgets as stretched, despite inflation slowing down since the pandemic.
According to the report, households headed by individuals under 35 saw their spending exceed their income in 2025, resulting in a shortfall of $4,249. This is in contrast to other age groups, where income exceeded spending. The report attributed this disparity to the fact that younger and lower-income households spend a larger proportion of their income on food and shelter, categories where prices remained high in 2025.
The Bank of Canada report also highlighted that inflation rose sharply during the pandemic recovery, reaching 8.1 percent in June 2022, the highest level in nearly 40 years. Although inflation has since fallen to around 3 percent, the report noted that the effects of higher prices are still being felt by households.
The report suggested that improving affordability would depend partly on increasing incomes, and that higher productivity in the economy would contribute to stronger gains in incomes and living standards without adding to inflationary pressures.
