Inflation is slightly less pronounced for the poorest households, a study finds, but their ability to cope is also less.
Statistics Canada reported on Wednesday that the increase in the cost of living accelerated further last month in the country, from 6.8% in April to 7.7% in May, compared to the same month last year. .
However, these figures are an average calculated from the price of a basket of goods and services that is supposed to reflect the consumption habits of Canadians. Some items in this basket, such as food (8.8%) and transportation (14.6%), increased more than others, such as housing (7.4%) and recreation (5.4% ). Consumption habits also vary, particularly according to income.
However, last year, expenditure on food, for example, proportionally occupied a larger share of the budget of households forming the poorest 20% than that of the richest fifth of the population (16.4% against 14, 5%), observed a study by the Mouvement Desjardins on Thursday. Households in the bottom quintile also devoted a larger portion of their expenditure to housing than the top quintile (35.8% versus 28.4%), while transport costs occupied a smaller place (13% versus 17.8%).
When we take into account the relative weight of eight major categories of expenditure, we find that Canadian households belonging to the poorest fifth had, last month, an annual inflation rate of 7.1%, slightly lower than than the Canadian average (7.7%). This rate was somewhat higher for households in the next quintile (7.5%), and even higher for the third to fifth wealthiest quintiles, all at 8%.
The main difference between the poorest and the rich is the increased importance of transport expenditure in the budget of the latter and the sharp increase in prices in the sector, the study reveals.
Not the same impact
However, we should not be misled by this small difference favorable to the most disadvantaged in terms of the inflation rate, indicates the author of the study, Desjardins Group economist Benoit P. Durocher. Since the lowest income households devote 61% of all their expenditure to food, housing and transport needs, compared to 38% for the richest households, they have less savings and less room for financial maneuver to adapt to rising prices.
A recent Statistics Canada survey reported that for nearly three-quarters of Canadians (73%), this price increase has “a little” or “a lot” influenced their ability to meet their daily expenses such as transportation, housing, food and clothing. However, this proportion rises to 85% for the fifth of the poorest households, against 56% for the quintile of the richest.