Canada’s annual inflation rate slowed to 1.6 per cent in September 2024, below the Bank of Canada’s two per cent target. Yet polling and household data showed many people still cutting essentials, sharing bills and worrying about debt. Slower inflation had not reversed the price increases already built into rent, groceries and other necessities.
Inflation is a rate, not a price level
An inflation rate of 1.6 per cent meant the representative consumer basket cost 1.6 per cent more than a year earlier. It did not mean prices returned to where they were before the surge.
Over the preceding three years, the consumer price index had risen 12.6 per cent. Grocery and shelter components were more than 20 per cent higher, leaving a much larger base even as monthly increases became modest.
Gas and travel helped the headline
Lower gasoline prices and declines in some clothing and airfare prices contributed to September’s slowdown. A household that did not drive or fly much might feel little benefit, while rent or mortgage costs continued to dominate its budget.
What the debt poll found
The MNP Consumer Debt Index, based on Ipsos polling in September, improved four points from the previous quarter, suggesting some aggregate optimism. At the same time, 42 per cent of respondents said they were less than $200 a month from insolvency.
About 30 per cent reported forms of bill splitting, including shared housing, subscriptions, bulk purchases or carpooling. Twenty-eight per cent said they were eating less to save money.
Sharing costs can hide distress
Living with others or dividing a subscription can be an efficient choice and should not automatically be labelled hardship. In the survey, however, respondents using these strategies were more likely to report being near insolvency.
Licensed insolvency trustee Wes Cowan said inquiries for help had increased over the preceding six to nine months. Survey results are self-reported and have sampling limits, but they aligned with evidence of sustained debt stress.
Food insecurity was already rising
Statistics Canada reported that 15.6 per cent of households experienced some degree of food insecurity in 2022, up from 9.6 per cent in 2017 and 11.6 per cent in 2018. The measure captures inadequate access to food because of financial constraints.
That data lagged the 2024 inflation release, so it did not show the exact current rate. It demonstrated that the affordability shock had serious consequences before headline inflation normalized.
Interest rates work slowly
The Bank of Canada had cut its policy rate three times since June 2024, but many borrowers had not yet renewed at lower rates. Variable-rate debt responds faster, while fixed mortgages can reset months or years later.
Higher mortgage-interest costs were themselves a major contributor to measured inflation. Falling rates could relieve payments over time, but people renewing from very low pandemic-era rates might still face an increase.
Wages did not help everyone equally
Average hourly wages had grown faster than inflation for 19 consecutive months. An average can improve while a low-income worker, a person with unstable hours or someone relying on a fixed benefit continues to lose purchasing power.
The parliamentary budget officer found the effects of inflation and high rates since 2022 were uneven, with lower-income households under particular pressure. These households spend a larger share on essentials and have less room to substitute.
Why the squeeze persisted
Thirty-one per cent of poll respondents expected their debt position to improve within a year, yet 48 per cent worried they could not reduce debt even if rates fell. Both optimism and strain could be true at once.
Inflation control was necessary because continuously rapid price growth would deepen the damage. Household recovery required more: wages and benefits catching up, sustainable housing costs, lower debt-service burdens and time. A better monthly number marked the end of acceleration—not an instant restoration of affordability.
