‘Lower income households are more likely to benefit from declining interest rates, as they tend to be more indebted relative to higher income households’

The income gap between Canada’s wealthiest and poorest households reached a record high in the first quarter of 2025, reports Statistics Canada (StatCan).

The difference in disposable income share between the top 40 per cent and bottom 40 per cent of Canadian households hit 49 percentage points, the widest gap since tracking began.

The figure has jumped from 43.8 points in early 2021, with the gap expanding each year since the COVID-19 pandemic.

The Q1 2025 data resulted from top earners benefiting from investment gains, while the lowest-income households saw their wages decline.

Households' ability to maintain their economic well-being varies with macroeconomic conditions, StatCan notes. In contrast with prevailing high interest rates in 2023, the Bank of Canada reduced its policy rate from 5.0 per cent in April 2024 to 2.75 per cent in March 2025 in response to easing inflationary pressures.

Along with declining interest rates, household interest payments decreased for the first time since 2022, falling by 4.8 per cent in the first quarter of 2025 relative to the first quarter of 2024, notes StatCan.

“While declining interest rates can lead to easing borrowing costs for households, they can also lead to lower yields on interest-bearing investments, such as savings and deposit accounts,” it says. “Lower income households...

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