The Bank of Canada controls inflation by adjusting the policy interest rate
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Learn more about how high inflation affects people’s finances. Click on a photo to learn about how inflation impacts individual households in different ways.
Alex and Lynn have been retired for about 10 years. They both receive retirement benefits from the Canada Pension Plan and Old Age Security Program—and have some savings in the bank. They paid off their mortgage on their home, but they are feeling the pinch from high inflation. When inflation was lower, Alex and Lynn had enough money to pay the bills and a little leftover to spend on recreational activities. They often used the extra cash to go on a trip somewhere sunny in the winter. But high inflation has made their day-to-day life more expensive, and they can’t afford a vacation to somewhere warm this year.
Emmanuel was injured in a car crash a few years ago. That injury has prevented him from returning to work. Emmanuel receives disability benefits through the Canada Pension Plan, but he doesn’t have much leftover after paying rent each month. What is left over goes to necessities like groceries, medicine and warm clothing. But Emmanuel finds it more challenging to buy even those items as inflation pushes the prices of these goods ever higher. Because of the higher prices for these goods, Emmanuel has started to cut back spending on necessities to make ends meet.
Fatima immigrated to Canada five years ago in search of a more prosperous life. She has sent money to her family in Syria each month since she arrived, with a little extra for special holidays. Fatima has a well-paying job, but her salary increases by only 2% each year—and inflation has gone up much more than that. Because of the higher cost of goods and services, Fatima has less money to send her family this year.
Genevieve and Antoine have two children under the age of 10 and taking care of them can get expensive. Both Genevieve and Antoine work. Their earnings pay the bills, but they rely on the Canada Child Benefit to cover their children’s extracurricular activities. The benefit pays for their kids’ swimming lessons and sessions with a math tutor. But the Canada Child Benefit is adjusted only once each year. It takes time for the Canada Child Benefit to catch up with the inflation they are already seeing in the prices of goods and services. So they have to make tough choices on which activities the children can continue to participate in and enjoy.
