Cost of living in Canada: what will cost more or less this year?

Cost of living in Canada: what will cost more or less this year?

Canada had its fair share of economic fluctuation in 2022. But will that trend change in 2023?

Russia’s war with Ukraine halted fuel supplies and forced gas prices to rise to record levels. The Bank of Canada and its interest rate hikes reinforced recession concerns for Canadians. Plus, inflation remained a point of concern.

As Canadians figure how to feed their families, live under a roof and driving their vehicles, they turn the calendar year, hoping for any type of financial relief.

Here’s a look at what things will cost in 2023.

GAS

Despite lower gas prices offering relief during the holiday season, pump costs soared to record heights in Canada last year. One industry expert believes the cost of gas will rise again in the new year.

Canada gas prices

Despite lower gas prices offering help, pump costs in Canada rose to record heights in 2022.

Dan McTeague, the president of Canadians for Affordable Energy, told CP24.com Canadians could see the average price of a litre of gasoline jump to $2 again.

“Count on it,” he said.

McTeague said that the relief at gas stations in recent weeks will be short-lived.

“The world got very nervous about rising interest rates, demand destruction, and COVID lockdowns in China. And all those played very heavily towards keeping prices in check and pushing them down,” McTeague said

He said by the end of April, prices could be back to just under $2 a litre.

FOOD

Food prices in Canada likely won’t see much improvement. According to the latest Food Price report from Dalhousie University, grocery costs are projected to soar up to seven per cent more in 2023.

Canada grocery store

The war in Ukraine plays a large role in rising food costs in Canada — a result of disruptions in three major commodities: wheat, sunflower oil, and fertilizers. The last of those plays a large role in lower crop production on Canadian soil, driving an estimated increase of six to eight per cent in costs this year.

The report anticipates a family of four will spend up to $16,288.41 in 2023, “an increase of up to $1,065.60 over the total annual cost [in 2022.]”

“We were hoping to have better news for Canadians, given the difficulties experienced in 2022, but our models tell us a different story,” the report said.

It noted the war in Ukraine plays a large role in rising food costs — a result of disruptions in three major commodities: wheat, sunflower oil, and fertilizers.

The report explained that limits in wheat and sunflower oil contribute to supply failing to meet demand, which will continue to be a problem as Western sanctions block Russian exports.

REAL ESTATE

There is some good news for Canadians, however, and it’s in housing affordability.

“Sales and prices are contracting particularly sharply in Ontario and British Columbia,” an August economic viewpoint report by Desjardins noted.

“At the national level, we expect a roughly 23 per cent decline in the average home price between February 2022 and December 2023,” it said. “And despite the accelerated pace of decline, we remain of the view that home prices will end 2023 above their pre-pandemic levels nationally and in each province.”

According to a TD Bank report, the average price of a home in Canada could drop between 20 and 25 per cent from in the first quarter of 2023.

Data revealed by the Canadian Real Estate Association (CREA) showed average prices reached $629,971 in July, which is a five per cent fall from $662,924 the previous year. This amounted to a three-per-cent drop from June.

As TD economist Rishi Sondhi wrote in the report, “The price drop represents an unprecedented decline at least going as far back as the late 1980s, when the data began, but it follows an equally unprecedented rise during the pandemic.”

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