As we step into 2025, Canadians are bracing for another year of rising costs. Numerous factors, including inflation, limited housing supply, a weaker Canadian dollar, and global political tensions, continue to affect the affordability of everyday essentials. Eastern Ontario and Southwestern Québec residents can expect to spend between $5,000 and $15,000 more than they did in 2024.
Let’s take a closer look at the key areas where prices are expected to rise and what’s driving these increases.
Food Costs on the Rise
According to the 2025 Canada Food Price Report, food prices are expected to increase by three to five per cent this year. Here’s how specific categories will be impacted:
- Meat: Prices are projected to rise by four to six per cent.
- Vegetables and restaurants: Expect a three to five per cent increase.
- Bakery and dairy products: These will see a two to four per cent hike.
For a family of four, this translates to an additional $801.56 spent on groceries annually, with total yearly food expenses averaging $16,000. This comes as Statistics Canada reports that more than half of Canadians have adjusted their spending habits to cope with higher costs. Moreover, the Canadian Food Sentiment Index found that affordability is now the top priority for 47.3% of Canadians when buying food, followed by nutrition at 24.9%.
Housing Market Pressures
The housing market is showing no signs of cooling. The Canadian Real Estate Association (CREA) forecasts national home sales to rise by 6.6% in 2025, equating to approximately 500,000 transactions. This increased demand is driving competition and pushing prices higher.
- The national average home price is hovering around $713,000, a 4.4% increase from 2024.
- In Québec, the average home price is expected to jump to $557,595, a staggering seven per cent increase.
- Ontario will see prices rise to approximately $877,546, representing a 2.4% hike.
Rising Utility Costs
Utilities are another area where Canadians will feel the pinch. Here’s what’s expected:
- Hydro Rates: In Québec, Hydro Québec has proposed rate increases of three per cent for residential customers, 3.9 per cent for businesses, and 3.3 per cent for large industrial customers. These changes are set to take effect on April 1, 2025, pending approval by the Régie de l’énergie.
- Gasoline Prices: Ontario residents paid an average of $1.45 per litre in 2024, while Québecers spent about $1.52 per litre. With the upcoming carbon tax increase, prices could jump by 20 cents per litre for gasoline and 14 cents per litre for propane, bringing Ontario’s average to approximately $1.65 per litre.
The Impact of the Carbon Tax
Ontario residents will see the carbon tax rise by $15 to a total of $95 per ton in April. While Québec’s cap-and-trade program shields its residents from direct increases, the carbon tax’s impact on goods and services will still be felt nationwide.
Agri-Foods Analytics Lab’s Senior Director, Sylvain Charlebois, notes that the carbon tax also contributes to rising food prices. “While retail food prices cannot be directly correlated with carbon pricing due to numerous influencing factors, wholesale food prices in Canada have surged relative to other countries. This suggests that the competitiveness of Canada’s agri-food sector has been negatively affected, partly due to the carbon tax. The long-term implications for food security and affordability are significant,” he explained.
On the bright side, approximately 90% of carbon tax revenues are returned to households through quarterly rebate payments, with the remaining 10% funding programs that help businesses, schools, and municipalities reduce their fossil fuel dependency.
Preparing for 2025’s Financial Challenges
As costs continue to climb, it’s essential for Canadians to plan and adapt. Here are some practical tips:
- Monitor Spending: Keep track of your expenses and identify areas where you can cut back.
- Shop Smart: Look for sales, buy in bulk, and prioritize affordable food options without compromising nutrition.
- Explore Energy Savings: Invest in energy-efficient appliances or make small changes like using LED bulbs and sealing drafts to lower utility bills.
- Consider Housing Alternatives: If buying a home is out of reach, consider renting in less expensive areas or exploring co-housing options.
While 2025 may bring financial challenges, staying informed and proactive can help ease the burden. By understanding the factors driving these increases and taking steps to mitigate their impact, Canadians can navigate the year ahead with confidence.
