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Canadian families could face $1,600 increase in cost of living in 2017

Canadian families could face $1,600 increase in cost of living as inflation doubles
A gas pump is pictured displaying a price of $1.06 per litre, in North Vancouver, on Wednesday, Jan. 20, 2016. (THE CANADIAN PRESS/Jonathan Hayward)

The average Canadian family could be forced to shell out an additional $1,600 this year, as the cost of gas, heating and air conditioning, transportation, as well as food are expected to rise.

Craig Alexander, chief economist and senior vice-president of the Conference Board of Canada, laid out these projected increases in the cost of living in a blog post earlier this week.

Alexander wrote that this spike in expenditures is part of an overall expected doubling of inflation from 1 per cent to two per cent next year.

“Prices for goods that have been rising will rise some more. Prices for goods that get discounted will tend to be discounted by less,” he said.


One area where Canadian families are expected to be hit by inflation is the price they pay at the pump.

Alexander said that that oil prices rose by 45 per cent in 2016 and may “climb modestly” in 2017.

This rise in the price of crude will in turn cause Canadians families to spend, on average, 10 per cent more to fill up than last year.

Alexander added that new carbon-pricing schemes in Ontario and Alberta will cause gasoline prices to jump more than 4 cents per litre.

Air conditioning and heating

Alexander said Canadian families can also expect their bill for heating and air conditioning to rise by close to one per cent.

However, he said prices will vary by provinces because of differences in carbon pricing and rebates.

In Ontario, Alexander said the government’s decision to provide a rebate on the provincial portion of the harmonized sales tax on electricity bills will save the average household about $11 a month, but, at the same time, the new carbon-pricing rules will see natural gas bills jump to the tune of about $6 a month.


Canadian families are also expected to face an increase in the cost of food.

Alexander said that meats, such as a pork and chicken, will be a “bit pricier,” but the biggest reason behind the spike is imported fruits and vegetables.

“Not only is it costing more to transport food to the grocery stores, it is also more expensive for food merchants to bring in imported food due to a weak Canadian dollar,” he wrote.

“The impact of higher food prices will likewise show up on the menus (of) restaurants”

Other costs

On top of these added expenditures, Alexander said that prices for cars, trucks and vehicle parts will rise 2.1 per cent in 2017, up from 1.8 per cent last year, with a similar increase expected in the cost of transportation services.

He added that the cost of education and health care, both of which tend to “rise faster” than inflation, will also increase by 2.5 per cent this year.

Mortgage rates are also expected to rise, prompted by a lift in bonds south of the border and in Canada as the U.S. Federal Reserve is poised to hike interest rates.

However, Alexander expects rates to remain “historically low.”

Despite these added costs facing Canadian families, Alexander wrote that inflation in Canada is “contained.”

He said that average weekly wages are expected to grow at “roughly the same rate” as inflation and after-tax household income should also “modestly outpace” it as well.

“The pace of inflation won’t pose a threat to the economy, but it does mean that Canadians will be shelling out more money for their purchases,” he said.

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