As we enter the second half of 2025, one question is on the minds of many Quebec households: will the cost of living finally stabilize? After years of high inflation and restrictive interest rates, the latest data from Statistics Canada suggests some easing. Yet beneath the overall numbers, concrete realities remain, particularly when it comes to groceries, rent, and households’ ability to save.
Inflation under control… on the surface
The Consumer Price Index (CPI) rose by 1.7% in May 2025 compared with the previous year. This marks the third consecutive month below 2%, within the Bank of Canada’s target range of 1% to 3%. This slowdown is partly explained by falling gas prices, notably due to the recent elimination of the federal carbon tax.
However, this overall rate hides significant disparities across spending categories.
Food costs are still rising
Food inflation remains a major challenge. In May, prices for grocery store purchases increased by 3.3% year over year. Although this growth is slightly lower than in previous months, it is still nearly twice the rate of overall inflation. Dalhousie University estimates that the annual cost of food for a family of four will reach around $16,800 in 2025, over $800 more than in 2024.
Fruits, dairy products, and meats have seen the most significant price increases. The result: even as overall inflation slows, the popular perception remains that “everything costs more than before.”
Housing: still under pressure
The housing sector continues to put pressure on household budgets. Rents rose 4.5% in May, following a 5.2% increase in April. This moderation is due to demographic slowdowns in some provinces and a slight recovery in rental supply. Nevertheless, in major urban centers like Montreal, demand remains strong, and rent increases continue.
Mortgage-related costs, although slightly lower, remain high due to still restrictive interest rates. As of July, the Bank of Canada’s key interest rate is held at 2.75%.
And what about savings?
Despite the slowdown in overall inflation, households still feel financial pressure. The cost of essentials, food, housing, and transportation, remains high, leaving little room for saving. The latest Statistics Canada data shows that household savings rates are declining, particularly among families with children.
But do you really understand the impact of reduced savings on your financial future?
It’s not enough to notice that you’re saving less, you need to measure the tangible consequences. Even a temporary drop in annual contributions can have a significant effect on the value of your retirement portfolio.
Updating your financial plan
Updating your financial plan has therefore become essential. Calculating now the potential impact on your retirement, taking into account real inflation, investment returns, and your life expectancy, can help you make adjustments in time.
Conclusion
Even if inflation appears under control on paper, the financial reality for households remains fragile. Food and housing expenses weigh heavily on budgets, affecting savings. To prevent this slowdown in savings from creating a domino effect on your future, it’s time to review your financial plan.
A financial advisor can help you simulate different cscenarios, adjust your savings strategies, and prepare for retirement despite an uncertain economic environment.