Statistics Canada reported that the gap in disposable income between the richest and the poorest Canadians grew to 47 percentage points, the widest since 1999. The top 20% of earners saw the largest increase in their disposable income share, largely driven by investment gains due to higher interest rates.
While higher interest rates can increase borrowing costs for households, they also lead to higher yields on savings and investment. Lower-income households typically have fewer resources to take advantage of these higher returns, resulting in a growing income disparity.
Only a slight rise in disposable income was noted among the lowest 20% of earners due to wage increases, whereas the middle 60% of Canadians experienced a decrease in their share of disposable income.
As of the second quarter of 2024, the wealthiest 20% of Canadians controlled over two-thirds of the country's wealth, averaging $3.4 million per household, while the bottom 40% held just 2.8%.
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