Canada’s Affordability Crisis and How Budget 2026 Plans to Address It

While inflation has slowed in some areas, prices remain much higher than they were before the pandemic. Recent Statistics Canada reports show that fewer Canadians are finding it easy to meet their financial needs, while housing costs and food insecurity continue to put pressure on households.

In Budget 2026, released on November 5, the federal government acknowledged these challenges. It also announced new financial benefits and investments intended to make life more affordable.

However, while some measures could provide immediate financial relief, others may take years to have a meaningful impact.

Key Takeaways

• Grocery prices in Canada have increased 33% since September 2020, despite slower food inflation in recent months.
• Only 24.1% of Canadians reported finding it easy to meet their household’s financial needs in spring 2025, compared with 47.7% in 2021.
• More than one-quarter of Canadian households experienced financial difficulties due to rising rent or mortgage payments in 2024.
• Budget 2026 proposes additional grocery benefits, increased support for low-income workers, and $44.7 billion in housing-related investments over 11 years.
• While direct payments could help eligible households, longer-term improvements in affordability will depend on housing supply, incomes, and economic growth.

Canada’s Cost of Living Has Increased Significantly

Statistics Canada’s September 2026 Consumer Price Index report showed that grocery prices increased by 1.7% compared with September 2025.

While this was the smallest annual increase since May 2024, grocery prices were still 33% higher than in September 2020.

This means that a basket of groceries that cost $200 in September 2020 would cost approximately $266 in September 2026.

Overall inflation also remains a concern. Canada’s annual inflation rate reached 3.1% in September 2026, partly because of higher energy prices. Gasoline prices increased 27.8% compared with the previous year.

According to another Statistics Canada report, only 24.1% of Canadians reported that it was easy or very easy for their household to meet its financial needs in spring 2025.

In summer 2021, that figure had been almost double, at 47.7%.

It’s not just groceries and gas that have become more expensive. Even housing, which is typically the biggest expense in Canadians’ budgets, has become less affordable.

According to Statistics Canada, 27.9% of households experienced financial difficulties due to rising rent or mortgage payments in 2024, compared with 22.6% in 2022.

Renters were particularly affected, with 33.7% spending at least 30% of their income on housing, compared with 17.4% of homeowners.

What Is the Government Doing to Improve Affordability?

The federal government has made affordability a central priority in Budget 2026.

The budget acknowledges that high costs for groceries, housing, energy, and transportation continue to affect household finances. This is especially true in light of the ongoing tariff war and trade uncertainty with the US.

The government’s proposals combine direct financial assistance with longer-term investments intended to improve affordability.

Here are some of the key measures that could put more money into Canadians’ pockets:

2027 Canada Groceries and Essentials Benefit Supplement

One proposed measure is an additional payment under the Canada Groceries and Essentials Benefit (CGEB).

Budget 2026 proposes a one-time 50% increase for the 2026–27 benefit year, to be delivered in early 2027.

Eligible recipients could receive:

• Up to $339 extra for a single person without children.
• Up to $679 extra for a couple with two children.

Combined with earlier benefit increases, maximum CGEB amounts for the 2026–27 benefit year would reach approximately $1,290 for a single person and $2,570 for a couple with two children.

While the supplement is a one-time payment, eligible Canadians will continue to receive their quarterly CGEB payments.

Increased Financial Support for Low-Income Workers

Budget 2026 proposes replacing the existing Canada Workers Benefit with an enhanced Build Canada Workers Benefit.

According to the government, approximately 1.9 million low-income workers would receive increased benefits, including 180,000 people who would become newly eligible.

The changes are expected to take effect for the 2027 taxation year. This would increase the maximum annual benefit to:

• $1,859 for eligible single workers without children, up from $1,709.
• $3,143 for eligible families, up from $2,943.

The minimum annual earnings required to qualify would also fall from $3,000 to $500.

The government also proposes making the Canada Caregiver Credit refundable, allowing eligible caregivers to receive up to $1,260 annually in 2027.

More Investment in Affordable Housing

The government proposes $44.7 billion in housing-related investments over 11 years.

These investments will expand affordable and non-market housing, reduce homelessness, and improve access to housing.

The budget also proposes measures to make mortgage rates more transparent. This will allow prospective homebuyers to compare offers from different lenders and get more affordable rates.

However, housing investments are unlikely to have an immediate impact on affordability.

Reducing Energy and Other Household Expenses

The budget includes measures to reduce household energy costs.

These include over $2 billion for a National Heat Pump Rebate program. This could help up to 820,000 households switch to more energy-efficient heating systems.

The broader energy-efficiency measures could eventually save households more than $1 billion annually on energy bills.

The government has also extended the temporary suspension of the federal fuel excise tax, which reduces gasoline costs by up to 10 cents per litre. The suspension will remain in place until January 31, 2027, before the tax is gradually restored by April 2027.

The government estimates that the measure will provide $5.3 billion in total fuel tax relief in 2026–27.

Budget 2026 also highlights previously introduced measures, including child care support and the removal of the consumer carbon price.

Together, these initiatives are intended to reduce household expenses and improve financial security.

Changes to Tax Rates

Budget 2026 did not introduce any new personal income tax rate cuts.

However, it did highlight tax reductions that were announced previously. For the 2026 tax year and beyond, the lowest federal income tax rate (on the first $58,523 of taxable income) goes down to 14% from 14.5% in 2025.

Will Canada’s Affordability Measures Be Enough?

While Budget 2026 proposes several measures to reduce household expenses, they might not be enough to address Canada’s affordability challenges.

Part of the problem is that many factors driving up living costs are beyond the government’s direct control.

For example, the US-Iran conflict and wider instability in the Middle East have disrupted global energy markets, pushing up oil prices. This has made gasoline almost 28% more expensive in one year. And gas prices impact not just what consumers pay at the pump, but also the cost of transporting goods.

Meanwhile, U.S. tariffs have put pressure on Canadian businesses, disrupted supply chains, and created risks for economic growth and employment. In fact, this trade uncertainty was a major driver behind the 2026 Budget theme, Masters of Our Destiny, and its focus on building a stronger, self-reliant economy.

Wage growth is another factor. According to Statistics Canada, average hourly wages increased by 2.2% year over year in October 2026, below September’s annual inflation rate of 3.1%.

Government benefits and tax relief can help households manage immediate expenses, but they cannot fully offset global price shocks or resolve Canada’s housing affordability challenges.

Ultimately, affordability for Canadians will depend on stronger wage growth, increased housing supply, and economic growth that translates into higher living standards.