(OTTAWA) The Parliamentary Budget Officer says low-income households have been able to maintain their purchasing power despite high inflation thanks to support from government benefits.
In a report released on Thursday, the Parliamentary Budget Officer (PBO) analyzed the evolution of the purchasing power of households at different income levels between the last quarter of 2019 – just before the pandemic – and until the end of 2022.
The report says that over the three years, all households saw their purchasing power increase – by 5% overall – when taking disposable income into account.
These data therefore suggest that households could buy more with their income at the end of last year than they could before the COVID-19 pandemic hit Canada in March 2020.
This is despite rising inflation that peaked at 8.1% last summer.
But the bottom 20% of households cannot meet the rising cost of living through their own sources of income, the PBO says. Government transfers therefore greatly contribute to the preservation of their purchasing power.
“This is not the case for the wealthiest households: they are better able to absorb the impact of the cost of living with their own sources of income”, underlines the PBO.
The analysis found that “pandemic benefits” preserved household incomes at the start of the pandemic and actually increased their purchasing power.
And while inflation has outpaced rising incomes for some time, households have generally seen their purchasing power rise from pre-pandemic levels.
“By the end of the first year of the pandemic [2020], disposable income had grown faster than consumer prices,” says the PBO.
