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How has inflation affected Canadians’ finances in recent years?

– moneysense.ca

Inflation and higher interest rates have eroded Canadians’ purchasing power since 2022, particularly for lower-income households, a new report from the parliamentary budget officer has found.

But wealthier households have seen their purchasing power rise thanks in big part to their investment income.

Over a longer time period—since the last quarter of 2019—the average purchasing power of Canadian households rose by 21%.

Government transfers, wage gains and net investment income supported the gain, said Parliamentary Budget Officer Yves Giroux in the report.

“However, this conclusion does not provide a full picture of the recent changes to purchasing power in Canada,” the report said. “In fact, it is widely accepted that inflation and the accompanying tightening of monetary policy have affected household purchasing power disproportionately, depending on income level.”

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