As wages grow, Canadians could find themselves with a bit more money in the new year.
Driving the news: According to a survey of Canadian employers, wages are expected to continue growing more than the rate of inflation into next year — marking the end of the pandemic-era financial roller coaster ride, where high inflation took a toll on buying power.
- The average worker’s salary is projected to jump 3.6% in 2025 (and even more in Alberta and B.C.), while the latest inflation reading clocked in price growth at 2%.
- Even as wages grew fast in the months coming out of the pandemic, the average hourly real wage fell by almost 5% between 2020 and 2022 with inflation factored in.
Why it matters: Canadians have piled on debt in recent years, with households owing $1.76 for every dollar of disposable income, the worst of any G7 country. Indebted Canadians could put extra money towards their balances, and others can spend on fun things again.
Zoom out: Businesses could also benefit from an influx of spending cash. According to a recent note from RBC Economics, Canadians have “lived a more frugal summer” as they pulled back on retail sales and lavish trips.—LA