Inflation has eased, but grocery prices are up — and British Columbians are struggling

As grocery inflation outpaces overall inflation for the third month in a row, many British Columbians are finding themselves squeezed and increasingly worrying about debt. 

Canada's inflation rate eased in April, following the federal government's removal of the consumer carbon tax and lower crude oil prices. 

Despite that, grocery prices saw a 3.8 per cent year-over-year increase last month, up from a year-over-year jump of 3.2 per cent in March. Some non-profits say the higher prices are placing more British Columbians in a crunch.

"We're actually seeing people come to us with higher amounts of debt as a result of all that accumulated borrowing and higher costs of living and higher cost of groceries that's stacked up over the last couple of years," says Isaiah Chan, vice-president of programs and services with the Credit Counselling Society.

The non-profit, which offers free credit counselling to help people with their monetary challenges, is seeing an increase in the amount of debt among clients coming to them for debt relief assistance — about 14 per cent more compared to the same time last year.

Chan says clients are borrowing more expensively, resorting to lines of credit and payday loans despite being aware of the high interest rates. 

"That to me is indicative of just the general stress — like people are not typically going to borrow at higher costs for luxury items or just sort of wants," Chan says. "They're doing that because they need to."

Household spending has gone up across all income groups in Canada, but those making the least are paying proportionally more.

From 2021 to 2023, households with the lowest incomes allocated 17.9 per cent of their pay cheques to food and 34.8 per cent to shelter, according to Statistics Canada's latest survey of household spending, released this week. For the highest earning households, those same numbers were 14.6 and 32.2 per cent, respectively.

More British Columbians are also expressing concerns about debt.

The MNP Consumer Debt Index, in its latest quarterly report last month, found that 58 per cent of the people they surveyed in B.C. expressed "heightened concern" about paying off their debt, up from 49 per cent the previous quarter.

The debt index is conducted four times each year and includes just over 2,000 adults across the country. It's accurate within plus or minus 2.5 percentage points 19 times out of 20.

The index also found that slightly more British Columbians feel less prepared to handle an interest rate increase of one per cent, and more report being $200 or less away from insolvency — both seeing a two percentage point increase from last quarter.

"It just means that people don't have any wiggle room in their budget," says Linda Paul, a licensed insolvency trustee at MNP. "So if there's any sort of unexpected loss of income or irregular expense, like a car repair or something of that nature, they just can't absorb it without having to use credit."

She adds that people's financial emergency pools are getting smaller "because they're spending their future money on servicing debt."

The grocery-inflation crunch has also been reflected in data around growing food insecurity and demand for food banks, which have gone up in the last year. 

Alžběta Sabová, director of food security with United Way, says grocery price increases are having "an enormous impact" on families' budgets and priorities, with food often the first to go when resources get funnelled into fixed expenses like rent.

The non-profit is seeing upwards of a 15 per cent increase in demand for their food hubs, which offer free groceries and other essentials to people who need them, compared to last year.

"We are seeing a lot of parents and a lot of working folks that have one, two, three jobs," Sabová says. "And so I can just imagine that if someone's working already that much and still needs support, there might be some very serious financial constraints."

Chan attributes the crunch to major upheavals in the last several years — the COVID-19 pandemic, political uncertainty federally and internationally, and the recent tariff war — paired with salary increases that haven't caught up.

He advises preparation and focusing on what's within one's control: minimizing discretionary expenses, having tough conversations with partners and kids about financial priorities, and reaching out to professionals for help around debt.

He's also advising that Canadians "hang in there."

"It took many years for all of this to really happen," he says. "It's going to take over the course of a few years for these things to unwind and for us to really feel some relief in our, in our pocketbooks."