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How The Inflation Rate Affects Canadians : June 2022 Budget Update

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Where do I begin? Everyone should know there has been an increase in the inflation rate, driving up costs and putting immense pressure on Canadians.

The most affected are low-income families who were already struggling to begin.

If there was ever a time when an emergency savings account would come in handy, now is the time.

Stashing cash is not new to those who lived through the 80s and 90s, but it’s tough for those who haven’t.

I don’t believe we are as bad off as in the ’80s when many homeowners couldn’t pay their mortgage and had to walk away.

That’s not to say it won’t happen again but preparing for the worst is never a bad idea for money concerns.

Since the pandemic, Canadians are seeing increased energy, grocery costs, rising interest rates, and labour shortages.

If I were to blog about debt repayment, you would probably tell me there isn’t enough money to pay it off.

As wages go up, the numbers are still behind the inflation rate, and Canadians continue to struggle for financial balance.

I’m writing this blog post in mid-July 2022, and the Bank of Canada governor Tiff Macklem says we should expect the inflation rate to hit over 8% in the next week and to stay there for months.

  • The inflation rate to 8% or 8.3% in July, sticking around for a few months
  • Fall to 3% by the end of 2023
  • Target 2% in 2024

As you can see, we will all face tough times for a bit and need to plan accordingly.

An inflation rate increase of over 8% is the highest Canadians have ever experienced since 1983.

Every aspect of our monthly budget shows the signs of inflation, including renovation materials.

Today, I’d like to quickly discuss how the inflation rate has eaten a hole in the Canadian budget.

inflation rates Canada
Prices begin to soar as the inflation rate pushes Canadians to the limit.

Impact Of The Inflation Rate On Canadian Households

Who’s at fault for not controlling the inflation rate? It’s not like Canada hasn’t been through a recession before that there weren’t protocols in place.

Perhaps the Bank of Canada is pulling back the reigns now with the increased inflation rate.

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Inflation Rate Hitting The Housing Market

Friends of ours remortgaged their variable rate to a 5-year fixed rate before another increase in inflation would force them to sell.

Where would they go?

Rent is at an all-time high and, for some, just as much or more than a mortgage would cost.

Being house poor takes on a new definition, especially for those Canadians who overpaid the past year.

Houses typically sell for $700,000 in our area, yet homeowners were getting over one million dollars.

As I write this post, in mid-July, homes listed for over one million dollars in our area have dropped below that number.

I’m talking about 1.3 million to 950,000 dollars, a massive price decrease and stumbling towards correction.

Many homeowners missed the boat, especially those who were retiring or plan to retire and have somewhere to go until then.

The phrase “Take the Money and Run” comes to mind.

It has been insane to watch house-for-sale signs go up with a price that didn’t make sense.

Sadly, people bought these homes and potentially faced owning more debt than home.

One person told me, “You can just bury me in the backyard,” which says a lot about the overpayment crisis.

In May, gasoline prices increased by 12%, the highest I’ve ever seen since moving to Canada.

However, as food prices increase, they continue to be a top concern among readers of Canadian Budget Binder.

Why is that?

Well, we can control what we buy at the grocery store week to week to control costs.

Does that mean we always get what we want? No, it means planning meals around the amount of money available.

Consumers may have to abort snacks unless it is for kids’ lunches and eat various meals based on sales or reduced product sales.

Shoppers Drug Mart Grocery Aisle showing sale price on products already affected by the Canadian inflation rate
Shoppers Drug Mart Grocery Aisle

How Can I Afford To Eat As The Inflation Rate Increases?

Whether on Facebook, where I am most active on social media, conversations tend to be around grocery price increases.

Also, through organic search on the blog, I’ve seen traffic spikes for grocery tips as the inflation rate continues to climb.

Related: The Ultimate Canadian Grocery Guide With Over 300 Blog Posts

Canadians continued to feel the impact of rising prices in May as consumer inflation rose 7.7% year over year. This was the largest yearly increase since January 1983 and up from a 6.8% gain in April. Excluding gasoline, the CPI rose 6.3% year over year in May, after a 5.8% increase in April.

Stats Canada 2022

Consumer Price Index Points Out Inflation Rate

Everything from housing to grocery expenses affects many Canadians with little to no extra cash.

Over 12 months, the chart below shows five significant components that increased at a high pace, according to Stats Canada.

If you’re working with a tight budget, wait until September, when grocery prices increase again.

How can we prepare for more grocery price increases?

The only way is to build a budget and find out what needs to go so you can afford the basics of life.

Even the,n Canadians may need to supplement with food banks, community help and donations.

 April 2022May 2022
All-items Consumer Price Index6.87.7
Food8.88.8
Shelter7.47.4
Household operations, furnishings and equipment4.15.5
Clothing and footwear0.22.2
Transportation11.214.6
Health and personal care3.43.6
Recreation, education and reading4.15.4
Alcoholic beverages, tobacco products and recreational cannabis3.13.0
Stats Canada Five Major Components With A Fast Pace Price Increase
Gasoline4.28190.5251.7281.912.048.0
Gasoline Prices May 2021 to May 2022

Gas has a relative importance of 4.28 on the Consumer Price Index with a massive 48% increase.

Throughout May 2021- May 2022, gas prices alone have sent Canadians to think about cheaper travelling to work options.

Luckily my work is close to our house, but we also make fewer trips into the city than we have to.

I even go as far as to fill two giant red gasoline tanks to top up my truck when it needs it.

When I do so at Costco, my bill Is nothing short of $200 and not filled from empty.

Ways To Work With Higher Prices And The Inflation Rate

Should you change the way you budget? Maybe.

That might sound like I’m asking the impossible of you, but I’m not.

All I’m saying is to evaluate your expenses and start dumping stuff.

What concerns me the most are Canadians who don’t know where their money is going.

If you’ve never considered using a budget, now is an excellent time to understand your financial habits.

While finishing our budget for June, I had the news on the television and felt anxious for the first time in a long while.

I understand we are in a good financial position with a mortgage-free house, but it still affects us watching prices increase.

Almost all of our retirement investments took a nose dive, which didn’t help us.

Renovation Materials Hit By The Inflation Rate

As an avid price-watching nerd, I see the increase in prices, especially groceries and home renovation materials.

Two weeks ago, I had to buy one bag of Rockwool insulation as I was short one from my previous purchase two years ago.

I was shocked at how the price had almost doubled and was happy I was only short one bag.

Currently, I am renovating our master bathroom and taking it down to the studs.

We estimate that the renovation will cost around $10,000, and yes, it needed doing.

The shower leaked into the basement, and mould was under the base unit.

I’ll be doing all the work and can bet it would cost more than double had I hired a contractor.

How We Can Help Fight Inflation Together

My readers are of the utmost importance regarding frugal living, and reading about their financial dilemmas is tough.

What can I do to help?

I can’t change what’s happening with the economy, but I can be a part of a community (that’s all of you) that helps share their ideas with another.

We all need to be part of a movement in Canada where we help each other get by.

Even the smallest gesture can make a difference in someone’s life.

There are many ways you can help a neighbour, friend, stranger or family member during times of need.

I’m not talking about handing out money, as not everyone has spare cash.

Think, donations, volunteering, listening and helping to spread good vibes.

If you use a budget, don’t be shy to explain what you’ve learned about budgeting.

These are all the situations I consider when I log into CBB daily.

What will I write about that will share our experiences and topics my readers want to read?

Lowering Grocery Prices To Increase Sales

For all the products a grocery store sells, they make up for non-sale items.

Think of your taxes increasing after getting excited the government is giving you money.

It sounds fantastic because you’re getting a cheque in the mail, but it’s never a freebie.

We will all pay for it in some form or another, and the same goes for groceries, although we have options.

Loss leaders, for example, are products that grocery stores display on the front of a grocery flyer or website.

These products are reduced in price to bring customers to the grocery store in hopes they will spend more money.

We also need to consider those of you who live in a small town with one grocer and limited transportation.

You either drive into the city or pay the higher price at the grocery store in your town or village.

Consumer Grocery Expenses Revisited

Ideally, grocers want Canadians to choose their store over the rest to build a solid customer base.

Well, I’m sure many struggling Canadians will flock to the cheapest grocery stores in Canada.

However, even the most expensive Canadian grocery stores must promote better sales.

It is worth adding the Flipp App to your mobile phone to compare prices on your favourite products.

Given the price increase, it wouldn’t shock me to see Canadian consumers go from store to store.

Fight The Inflation Rate Without Wasting Time

It’s hard to be optimistic, but we must work with what we have available now.

Stop wasting time complaining about it because there’s not much we can do what’s already done.

For some, that might mean a budget reassessment and eliminating unaffordable expenses.

These types of expenses are typical “wants.”

Overall, I hope you find the grocery information I’ve written about over the past ten years a way to inspire your decision-making process.

Discussion: What tips can you share for Canadians struggling with increased food prices?

Please share your comments below for everyone.

Now, on to our June 2022 Budget Update.

CBB Family Budget Report

June 2022 Net Worth Update Canadian Budget Binder
June 2022 Net Worth Update Canadian Budget Binder

June 2022 Budget Summary

Almost everything in our June budget that spiked was due to rising costs.

Our biggest hit category was groceries; although we did shop at Costco, I stocked up in our defence.

The fewer times I need to go shopping at Costco, the better.

To name a few expenses, I had to refill items such as pet food, bird seed, and gardening supplies.

The most expensive expenses went to our master bathroom renovations. We plan to buy better quality products, so we don’t have to deal with problems for many years.

Summer clothing was another budget category that was high in June.

We bought clothes for summer and did some back-to-school shopping.

We also both needed a pedicure while we were at the mall.

We did, and taking care of your feet is essential to avoid complications.

As we age, we find that we’re not devoting enough time to self-care, although we plan to change that.

I noticed we didn’t have the budget, so things fell by the waist.

Both Mrs. CBB and I struggled with dry feet and to no avail so we booked a pedicure.

I’m happy to say we only go once a year, but it has become essential for us to walk happily.

Lastly, our son is being looked at by our eye doctor with a comprehensive eye exam not covered by benefits or the Ontario Health and Insurance Plan (OHIP).

I’m sure once we get financial aid for his Autism, we can use the money to pay for such services.

His eyes have changed since we last had them done in senior kindergarten, so there will be a change in prescription.

Mr. CBB

Budget Expenses Percentages

June 2022 Household Budget Percentages Canadian Budget Binder
June 2022 Household Budget Percentages

It was nice to see our savings ratio rise as it was starting to get iffy but expected this time of year.

Monthly Home Budget Breakdown

Family Net Income Canada
Canadian Budget Binder Net Income June 2022

Below is a breakdown of our expenses which helps us understand where our money goes.

  • Chequing– This is the bank account from which we pay our household bills. We use Simplii Financial, TD Canada Trust, and Tangerine Bank. Join Simplii Financial today! Read more about the best Canadian online virtual banks.
  • Emergency Savings Account– This money is in a laughable high-interest savings account.
  • Regular Savings Account– This savings account holds our projected expenses.
  • Monthly Budgeted Total: $6564.18
  • Monthly Net Income Total: $11,667.97
  • (Check out the  Ultimate Grocery Guide to see where our grocery money goes)
  • Projected Expenses: These are expenses we know we will pay for throughout the year = $905.00
  • Total Expenses Paid Out: $8,006.27
  • Total Expenses Paid Out: Calculated is $11,667.97 (total net monthly income) – $905.00 (projected expenses) – $2,756.70 (Savings to emergency fund) = $8006.27
  • Actual Cash Savings going into Emergency Savings: Calculated is $11,667.97 (total monthly net income) – $8006.27(actual expenses paid out for the month) – $905.00 projected expenses) = $2756.70

Estimated Budget and Actual Budget

Below, you will see two tables: Our monthly and actual budgets.

Our monthly budget represents two adults and a 7-year-old boy.

Budget Colour Key: It is a projected expense if highlighted in blue.   

Since May 2014, we’ve been mortgage-free, redirecting our money into investments and renovations.

Spending less than we earn and budgeting has been the easiest way to pay off our debt and save money.

Monthly Budget Amounts June 2022

2022 Family Budget for Two Adults and one child.
2022 Family Budget for Two Adults and one child.

Actual Monthly Budget June 2022

Actual June 2022 Budget For two adults and one child.
Real Budget June 22, 2022, Canadian Budget Binder

Another month under our belt for 2022, but I’ll be back in August to share our July Budget Update.

Keep reading below to see how our 2022 Budget Challengers are doing with their monthly budget report.

Thanks for reading,

Mr.CBB

Monthly Budget Challenge 2022

2022 budget challenge CBB
Rules For The 2022 Budget Challenge on Canadian Budget Binder
Rules For The 2022 Budget Challenge on Canadian Budget Binder

Welcome to the 2022 Budget Reports from our 2022 budget challenge.

Over the past two years, this challenge started with many positive CBB readers who wanted to join.

For 2022 we began with six people ready to change their lives by challenging how they manage a budget.

Each budget summary will always fall under the same Budget Challenger number below.

If you plan to leave comments about one of the budgets below, always use the budget challenger number, so they know it’s for them.

Budget Challenger #1

Hi. June was busy.

I worked, exercised and just got outside to get stuff done around the house.

Although I couldn’t get any overtime at work, I lost eight pounds which is always a pleasant surprise.

In June, I also held a yard sale successfully and made 100 dollars which came in handy.

My son paid me 80 dollars which went right into my bank account.

No, sarcan this month because the bag isn’t complete. 

I received a Caddle app cheque for 24 dollars which was a pleasant surprise.

I am budgeting $100 monthly for the next ten months to pay off $1000 of owed income tax.

I’m trying not to use the ac or wastewater if I don’t have to so we can save money.

Moving forward, I no longer have overdraft protection with my bank account. I plan to ensure I have enough funds in the account at all times.

I don’t have any birthday savings because I have a little stockpile.

After some consideration, I cancelled Netflix and TSN as they are unaffordable for us. However, I will get Crave which is 16 dollars per month.

I plan to have another yard sale at my friend’s house in July. 

I’m looking into free things to do around the city. 

My checkout 51 app is almost 100 dollars, and I plan to cash out in July.

I will be getting the carbon tax rebate in July. 

I will also take some good old clothes to a consignment shop.

Thanks.

Hey,

Do I have to ask why your cell phone bill is so high?

Who is your provider, and how your monthly expense covers many cell phones?

We don’t have Netflix but pay for Prime on Amazon and watch what movies they offer.

Our cable was cancelled over a year ago, as was our home phone. The best decision we made was to cut down our expenses.

A friend of ours has a wedding dress that she had cleaned and boxed and asked us the best way to sell it. I don’t know much about consignment stores, so it’s certainly a topic I’d invest my time in learning.

Good Luck in July, and we will chat then.

Mr. CBB

June Budget Challenge
June 2022 Budget Challenge Canadian Budget Binder
Monthly Budget June
Budget Challenge June 2022 Update

Budget Challenger #3

Hi Mr. CBB,

Now that we have had a good six months of tracking, there is one thing we wanted to adjust in our budget.

Starting in July, we will include the rents from the previous month so that we know what amounts minus the bills are remaining in a more timely manner.

We noted no rental income for June, which makes us short -104.73 in June.

We chose this month to start as it was a three paycheck month for me, plus some RRSP contributions from past years were reassessed, giving us a few more dollars to work with.

That way, our account stays balanced primarily.

We lost a renter from our units but will have a new one by July 1.

And the ad for our current house, a bachelor unit, was posted on the University website, and we hope to have a student there by September.

As everyone has felt, gas prices took a massive chunk of the budget this month, from a camping trip, two road trips and the regular driving done in the month, ouch!

We will be heading out on another vacation shortly, so I am sending this a few days early.

I will have to finish adding in the last few days after we return.

Hey,

No problem; you can add after you get back if you’d like. Did you find it hard to find a renter?

Can you increase the rent once someone leaves? I don’t know much about being a landlord in Canada.

I know what you mean about gas; going on road trips is costly for everyone. We will stay close to home this summer after I’m done with the bathroom.

When I read that you learned something from tracking your money, it made me smile.

Doing so will always give you a bigger picture of what is happening instead of not knowing.

Congratulations on that, and I hope your new turnaround for the budget is successful for you.

See you in July.

Mr. CBB

Budget Challenger #4

Howdy, CBB!

June threw me a bit of a loop with off-the-charts food spending, unexpected health expenses, and a gift request for family.

Let’s start with food – groceries are getting more expensive, I was low on staples that needed stocking up, and I ate more junk food than I needed.

On Canada Day, part of the highway between BC and the Yukon washed out, so getting groceries here will be challenging. I anticipate July’s grocery spending will be even worse.

Health-wise, I had to pay for a CT scan of my jaw in preparation for hopefully getting a dental implant in the fall.

I’m attempting to see if that can be covered under my insurance through work – X-rays are, but I’m not sure about CT scans.

Lastly, my sister asked if I could make a rainbow quilt for my niece, who is transitioning out of her crib into a Big Girl Bed.

How could I say no? I didn’t have enough fabric in my stash, so I spent some money that I had intended to go to my vacation account.

I’m terrible at remembering Christmas and birthdays, so bringing a gift on my trip this summer should redeem me a bit J

July is the Uber Frugal Month Challenge with The Frugalwoods, which is always fun.

I’ll see you all in a month.

Budget Challenge June 2022 Canadian Budget Binder update
Budget Challenge June 2022 Canadian Budget Binder

Well done with your June budget. Where will that $0.49 go? I noticed that you have a self-care category, and I’d love to hear more about that if you can email me.

If you are a CBB reader and budget for self-care, I’d also like to hear from you.

Mr.CBB

Budget Challenger #5

So I appear to be locked out of my credit card info online – is that Rogers thing not fixed yet?

It makes it hard to speak about my finances without correct info in front of me, but I’ll do my best. I was a little loose with money, not on purpose, but things were rough this month.

As we approached my 40th bday, we were going to take a short vacation; well, my father-in-law had a stroke and then had a second a few days later.

We were in another province, so we rushed home. Everything that happened that week was done with cash, and I didn’t track my money as I usually do.

It helped to show how much savings are needed. We didn’t have to think about anything; it was simply charging it or taking it out of cash we had put aside for firewood deliveries.

Again, without seeing my finances, I’m going off memory. Everything stayed the same except for eating out and gas money.

Those were slightly higher as we were on vacation for a few days and travelling to the hospital. Although my mom gave me birthday money, so it probably equals out.

Gas being up in price is hurting with how much travel I have to do, but I’m lucky that some days I travel for work.

I get travel money, which helps, and my car is fuel efficient another bonus.

Sadly, I’m sorry that Air Miles has ended at many retailers. I usually make between $100 to $250 a year in Air Miles.

Although this is not a lot for some people who do collector cards, I don’t do anything extra to earn it, so it’s a nice bonus.

I hope to get a better idea of how Scene and the PC Optimum work, and then we’ll see what happens.

The good news is that I still have $400 in cash miles to spend.

Currently, I’m trying to figure out if I should hold on to it for the one store that seems to be continuing to use it or use it to cash out at stores I prefer now.

Ugh, I’m not too fond of change.

That’s my update for this month; hopefully, Roger’s is up and running again soon so we can all do our banking like normal!

Hey,

Thanks for sharing this with us, and it’s easy to see how important it is to have emergency savings.

I’m sorry to hear about your FIL, and I hope he is recovering. It’s never easy, and I think about the day I must make the trip back home.

We use Air Miles and PC Optimum, and I’d support PC Optimum as it is a fantastic program.

I had no idea about the Air Miles, so I’ll have to look into that. Ours are transferred to Vacation Miles or something to that effect.

We never put much effort into the program, but I was always intrigued by how a CBB would cash in on her Air Miles rewards.

Here’s a post about the PC Optimum program I wrote; however, we are over 6.5 million points in and not sure where to spend it yet.

I hope you have a better July.

Mr. CBB

Budget Challenger #6

Hey everyone,

So things are a little bit crazy here this year. It would have been pretty straightforward if I had done this last year. But this year poses complications.

  • Separated from January until June
  • Surgery on my ankle on May 25

My spouse and I now have separate bank accounts from the separation.

The money I loaned to my youngest son last year for his business has complications, and we will have to go after the company he tried to buy equipment off of—so lawyers’ fees will now be paid out.

All this makes budgeting complex and living difficult. I am on sick benefits and only get the cap portion of help, not even 60% of my income (thanks to the government). 

My plan when my spouse came back was to keep living on my income, but each of us paying into savings weekly that would equal his income–then those savings would finally pay off our mortgage in 4 years.

With me being on sick benefits, living is very tight, and that plan is on hold. I may not be going back to work until September.

Long story short with my son:  he paid just over $100,000 for equipment from a company in Montreal. 

He never received it, so now we have to go through lawyers to try and get it back if the company doesn’t go bankrupt. 

We planned to use that money which would have paid off our mortgage.

In the meantime, we paid some hefty lawyer fees to get things rolling.

Now with the separate bank accounts, my hubby isn’t a finance guy and doesn’t see the problem that I can no longer see what we spend. 

If this doesn’t get remedied, I may have to drop out of this contest since I can’t be sure everything is accurate.

A lot is going on here! I have dipped into our emergency fund to pay off credit cards and other savings for lawyer fees. 

So it does pay to put money into savings which I am still trying to do.

I received annual vacation pay end of June, but that will pay for the fees for the leased land we have a trailer on in Haliburton Forest. 

We just got the trailer fall of 2020, so I hope we can maintain this.

Hopefully, things will improve next month!

Hi,

Wow, you have so much on your plate right now, and I’m sorry you’re going through this.

If you have to drop out, feel free to; however, writing about it may give you an outlet and perhaps optimism.

In tough times sometimes it’s nice to have people listen to your story without knowing who you are.

My only feedback is that everything will fall into place as it should.

With the $100,000 payment for the equipment, did he get a receipt?

Take good care, and you can always message me privately.

Mr. CBB

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Have an excellent budget month, everyone.

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2 Comments

  1. Hi CBB 4,
    I like how you have created a self-care savings account and used projected expenses. When a budget fails, some people might blame it, but it’s planning for those projected expenses that aren’t monthly bills. We also keep a float in our chequing account where most of our bills get paid.
    Thanks for explaining.
    Mr. CBB

  2. CBB Challenger 4 here – Mr CBB asked about my Self Care Account.
    Self Care is a projected expense account for bi-monthly haircuts, aesthetics (monthly brow tint and waxing), and anything pretty that might catch my eye 🙂 I had originally set the account up to save for a custom winter parka and when I didn’t end up getting one, I converted it to Self-Care-but-not-Health-Care (Health Care being a separate account).
    Re: the 49c surplus at the end of June – I like to have a float of approximately $500 in chequing so I’m never in danger of going into overdraft. That 49c will just hang out in the float. If there’s a surplus of over $5, I would throw it into one of my Projected Expense accounts.

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