Declining purchasing power of Canadians starting in 2022

A new report by the Parliamentary Budget Officer shows that the purchasing power of Canadians will decline from 2022, especially among low-income households, due to inflation and high interest rates.

But wealthy families have seen an increase in their purchasing power due to their investment income.

According to experts, the small increase in income has not been enough to neutralize the effect of inflation on the purchasing power of low-income households.

The report states that on average during this period, families have experienced a price increase of about 15 percent in the basket of goods and services.

The report also noted that inflation started to pick up in 2021 as the cost of raw materials and supply chain disruptions pushed up prices.

With the sharp increase in inflation in 2022, the purchasing power of households has decreased. Meanwhile, the Bank of Canada quickly raised its key interest rate from a pandemic-era low to five percent by mid-2023.

According to Global News, the consumer price index also reached its highest level of 8.1 percent in June 2022 and then started to slow down.

Although rising mortgage payments and high interest rates put pressure on many households, it helped increase investment income, the report said.

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