Per capita disposable income

Real per capita disposable income in Canada is estimated to reach $32,924 in 2025, representing modest growth of 0.5% over the previous year. The subdued increase reflects persistent affordability pressures despite interest rate cuts, as wage growth has struggled to keep pace with the cumulative impact of elevated inflation over recent years. Income distribution has become increasingly unequal, with the gap between Canada's highest and lowest income households reaching a record high in the first quarter of 2025. The lowest income households saw disposable income increase by only 3.2% year-over-year despite significant government transfer increases of 31.2%, because their wages declined 0.7% and investment income fell 35.3%. In contrast, the highest income households experienced much stronger disposable income growth, benefiting from both wage gains and investment income growth.

The past five years have witnessed dramatic volatility in real per capita disposable income, driven initially by unprecedented government pandemic support and subsequently by its withdrawal. Income surged 6.1% in 2020 to reach $35,031, an all-time peak, as federal emergency programs including CERB and CRB provided direct stimulus that more than offset market income losses from business closures and job disruptions. This represented an extraordinary reversal of typical recession dynamics, where government transfers temporarily boosted purchasing power above pre-pandemic levels even as employment plummeted.

The withdrawal of pandemic supports triggered sharp declines beginning in 2021, with real per capita disposable income falling 4.9% to $33,323 as emergency benefits expired and inflation began accelerating. The decline accelerated in 2022, with income plunging another 4.0% to $31,983, the lowest level since 2016, as inflation reached four-decade highs and aggressive Bank of Canada rate hikes reduced investment income while increasing debt servicing costs for mortgage holders and other borrowers. For households in the lowest income quintiles, interest payment increases exceeded investment income gains, compounding the erosion of purchasing power from inflation in essential categories like food, shelter, and transportation.

Recovery began tentatively in 2023 with growth of 1.1% to $32,347, continuing at 1.3% in 2024 as labor market conditions stabilized and wage growth resumed. However, the recovery remained incomplete, with 2025 levels still 6.0% below the 2020 peak and barely matching 2019 pre-pandemic income levels. This stands in stark contrast to Canada's historical income trajectory—long-term analysis shows Canadian real disposable income per capita has grown at an average of just 1.3% annually over four decades compared to 1.9% in the United States, creating a cumulative 40% growth gap that reflects structural challenges in productivity and wage progression.