Per capita disposable income

Real per capita disposable income in Canada is estimated to reach $33,820 in 2026, up 1.6% from the previous year. This accelerated growth reflects calming affordability pressures driven by interest rate cuts and rising wages. 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 strengthen by only 3.2% year-over-year, despite significant government transfer increases of 31.2%, because their wages declined by 0.7% and investment income fell by 35.3%. In contrast, the highest-income households experienced much stronger disposable income growth, benefiting from both wage gains and investment income.

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. Disposable income plummeted by 4.9% in 2021 after reaching an all-time peak the year before, as pandemic supports and emergency benefits were withdrawn and inflation accelerated. The fall continued in 2022, plunging another 4.4% to $31,858, the lowest level since 2014, 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 payments increased more than investment income gains, compounding the erosion of purchasing power from inflation in essential categories such as food, shelter and transportation.

Recovery began tentatively in 2023 and exceeded 2019 pre-pandemic levels in 2025, as labor market conditions stabilized and wage growth resumed. This still 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.