The wealthiest 20% of households controlled over two-thirds — nearly 68% — of the total net worth in Canada in the first quarter of 2023, while the least wealthy 40% accounted for 2.7%, the federal agency reported on Tuesday.
Economists say that the growing income and wealth gap reflects the impacts of the Bank of Canada’s aggressive rate-hiking campaign on indebted homeowners and low-income households that are being squeezed by rising interest rates, which are increasing the cost of servicing debt. And it’s the least wealthy and younger households who are feeling the pinch of inflation particularly hard.
“Lower income and younger households tend to hold entry level positions and service jobs in the accommodation and food industry,” said Gillian Petit, a research associate at the department of economics at the University of Calgary. “These wages tend not to keep up with inflation.”
For younger homeowners rising interest rates mean “their mortgages are becoming more expensive and at the same time they’re not necessarily making more income, increasing that debt-to-income ratio,” Petit said.