Rising temperatures and rising costs: Cost of living in Canada stays high in July

Over the summer, Canada has remained expensive for both Canadians and newcomers alike.

For newcomers especially, this means spending more time saving and establishing a realistic budget before arriving in Canada, whether it is for work, to study or as a permanent resident.

Many key indicators over July show that, while some inflation is slowing, the cost of living remains high in Canada and is likely to remain so for a while.

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Inflation up 3.3% from last July

According to the Bank of Canada, inflation in July 2023 was up 3.3% year-over-year. This follows a 2.8% increase in June.

Earlier this year, the Bank of Canada projected that Canada would reach the targeted 2% level of inflation by the end of the year. However, stronger spending than expected has kept inflation high, and the Bank has responded by keeping interest rates high to curb spending.

It will take time for Canada’s economy to feel the full impact of higher interest rates. Canada’s current overnight interest rate stands at 5%, the highest it has been since 2001.

Groceries still experience the highest price increases

The cost of groceries is also elevated. The most recent Consumer Price Index report from Statistics Canada shows an 8.5% increase for July compared to last year. However, this is actually lower than the year-over-year increase for June, which had a 9.1% increase.

Prices are high enough for a recent Statistics Canada report to note that higher prices are reducing the amount of food that consumers buy at the store. It says that, as of early 2023, household food volumes had declined in six of the past eight quarters (and were unchanged in the remaining two). Additionally, food banks throughout Canada are reporting record levels of demand.

The report also notes that the price of fresh fruit rose 4.1% in July compared to the previous year, but this increase is lower than the 10.4% increase in June. It says that the slower growth for July can be credited to a 40% price decrease in grapes

How newcomers can save money on groceries

It is possible to reduce the price of grocery shopping with organization and planning. For example, many stores will offer coupons and release them once a week. You can download coupons on sites such as websaver.ca or smartcanucks.ca. Always read the fine print on a coupon. Sometimes if an item is already on sale it will not be eligible for a discount. Also, all coupons will expire after a certain date.

Further, you can check store flyers for sales. It takes time, and you may need to visit more than one store for the things you need, but you can save quite a bit of money by visiting multiple stores.

Additionally, many stores will offer price matching. This means you can bring the flyer from a competing store, show the cashier that an item is less expensive at the other store, and they will match the competitor's price.

Price matching is helpful but can take time. If you have several items to match, it is considered polite to be organized and do your shopping at a less busy time of day to avoid causing delays for other customers.

Another strategy is to shop for meat or bread within 1-2 hours of a store closing. At this time of day, stores will sometimes mark down some prices on items that have not yet sold. Also, store brands (such as No Name, Our Compliments, or PC) are typically a little less expensive than name brands and of similar quality.

Average home price in Canada exceeds $650,000

The Canadian Real Estate Association (CREA) shows that the average price of a home in Canada was $668,754 in July, up 6.3% from the previous year.

This price represents the national average. The most expensive homes were in British Columbia, where the average price of a home was $966,181 and in Ontario, at $856,269. The lowest average home price was in Newfoundland and Labrador at $289,800.

Canadians and newcomers have cited many concerns about affordability as the price of a home continues to rise and has made homeownership unattainable. Prices are also exacerbated by a low supply of affordable housing.

Prime Minister Justin Trudeau met with members of his cabinet last week in Prince Edward Island (PEI) to discuss housing, among other issues. No immediate solution was brought forward, but the Federal Government has been taking measures to increase housing affordability such as the First-Time Home Buyers Incentive and establishing a national housing strategy.

Considering the cost of housing, many people in Canada are turning to shared accommodation. A census report released in July 2022 showed that households composed of roommates—that is, two or more people living together, among which none are part of a census family—are the fastest-growing household type. The number of respondents living in these arrangements increased by 54% between 2001-2021. These are often in rental situations but co-ownership (buying a house with a trusted friend), is becoming more common.

Newcomers may find certain provinces more affordable

Depending on lifestyle and situation, if home ownership is a priority, it could be worth considering moving outside of an urban center or even Canada’s more densely populated provinces. The Atlantic provinces (Nova Scotia, New Brunswick, Newfoundland and Labrador and PEI), Quebec, and the prairies (Alberta, Saskatchewan, and Manitoba) all have an average price lower than $500,000. The Atlantic provinces, as well as Saskatchewan and Manitoba, all report an average home price of $400,000 or less according to CREA.

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