The Cost of Living in Canada
How rising prices are squeezing Canadian wallets in 2026
Canadians are spending more on nearly everything in 2026, with inflation outpacing wage growth over the past five years. Food, shelter, and gasoline prices have surged, leaving households to navigate a cost-of-living crisis that shows no signs of easing.
Inflation hits a five-year high
Canada’s Consumer Price Index (CPI) reached 34,735.5 in January 2026, up 0.7% from December 2025 and 1.0% from a year ago. Over the past five years, inflation has climbed steadily, rising 11.3% since 2022. The Bank of Canada’s aggressive rate hikes in 2022-2023 slowed price growth, but inflation remains stubbornly high, driven by persistent shelter and food costs.
Five-year inflation trend (CPI All-items)
Source: Statistics Canada, Table 18,100,004
Food prices remain a daily pain point
Food inflation has been volatile but consistently high, with the CPI Food index hitting 167.2 in December 2024 (latest available). Prices jumped 14.9% year-over-year, driven by global supply chain disruptions, climate-related crop failures, and rising production costs. After a brief dip in 2022, food prices have rebounded sharply, outpacing overall inflation.
Five-year food price trend (CPI Food)
Source: Statistics Canada, Table 18,100,004
Shelter costs keep climbing
Shelter expenses are the biggest driver of inflation, with the CPI Shelter index at 165.9 in January 2026—up 1.5% from a year ago and 19.4% since 2022. Rising mortgage interest costs, tight rental markets, and construction supply shortages have pushed housing affordability to crisis levels. The federal government’s 2024 housing policies, including the Home Buyers’ Plan expansion, have had limited impact on curbing price growth.
Five-year shelter cost trend (CPI Shelter)
Source: Statistics Canada, Table 18,100,004
Gasoline prices fluctuate but stay high
Gasoline prices averaged 306 cents per litre in January 2026, down from 314.5 cents in December 2025 but up 13.9% year-over-year. Over five years, gas prices have surged 63%, driven by geopolitical tensions, refinery constraints, and carbon pricing. While prices dipped in late 2024 due to lower global oil demand, they rebounded in 2025-2026 as supply tightened.
Five-year gasoline price trend
Source: Statistics Canada, Table 18,100,004
Wages struggle to keep up with inflation
Average hourly wages grew to $227.8 in January 2026, up 7% year-over-year but only 36% over five years. While wages have outpaced inflation in the short term, the cumulative gap over five years means Canadians’ purchasing power has eroded. The Bank of Canada’s rate hikes aimed to cool inflation but also slowed wage growth, leaving many workers feeling the pinch.
Five-year average hourly wage trend
Source: Statistics Canada, Table 18,100,004