Canadians buying food face the prospect of credit card bill eating them up

Time of India

23-05-2025

Canadians are increasingly relying on credit cards to afford groceries as food prices continue to rise, exacerbating household debt. Despite overall inflation easing, food inflation remains high, driven by factors like the US-Canada tariff battle. Vulnerable populations are disproportionately affected, leading to increased food bank usage, prompting calls for government and industry action to address the crisis.
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The Cost of Food is Rising
Inflation Rates in Canada
Credit Card Use on the Rise
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Impact of the US-Canada Tariff Battle
Impact on Vulnerable Populations
Government and Industry Response
Looking Ahead
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With grocery store prices still rising throughout Canada , more and more Canadians are resorting to credit cards to pay for staple food items, fuelling worries of soaring household debt and financial insecurity.Food inflation has been a stubborn Canadian problem for the last few years. Even as overall inflation rates have moderated, supermarket prices have refused to budge. Recent Statistics Canada figures indicate that food prices are up over 20% since 2021, with basics such as bread, milk, and vegetables experiencing some of the largest increases.For many families, these higher prices are straining already tight budgets. 'We're seeing more people forced to make difficult choices at the grocery store—buying less, switching to cheaper brands, or even skipping meals,' said financial analyst Laura McKay. 'But for some, even those measures aren't enough, and they're relying on credit to get by,' according to Global News.Canada's average inflation rate decreased to 1.7% in April from March 2025's 2.3%, and from 2.6% in the prior month, as there was a widespread moderation of price increases in the economy. Yet, food inflation still lags behind the general Consumer Price Index , with food bought at stores increasing 3.8% from a year earlier in April 2025—up from 3.2% in March and the fastest rate since January 2024. This ongoing divergence underscores how grocery prices remain one of the greatest stress points for Canadian families, despite headline inflation slowing.A recent Canadian Bankers Association report points to an alarming trend: credit card balances are increasing, and more Canadians are taking debt from one month to another. In the first quarter of 2025, the average credit card balance hit a record high, with food purchases representing an increasing proportion of that expenditure.Financial advisors say such a dependence on credit is not sustainable. " Charging for groceries on credit cards can quickly become a debt trap, particularly when interest rates are at 20%," said debt specialist Michelle Harris. "You're actually paying more for the same groceries, and it's a lot more difficult to crawl out once you get behind," said Global News.The recent tariff war between the US and Canada is also driving food inflation. The retaliatory tariffs on American food products, imposed by Canada in response to new US tariffs on Canadian products, have resulted in higher costs of imports for Canadian retailers and producers, especially for perishables and essential ingredients that come from the US.As a consequence, consumers are paying more for impacted products at the supermarket, on top of already record inflation levels. The tariff war is likely to maintain upward pressure on food prices over the next several months as supply chains retool and companies transfer more costs to consumers.Low- and middle-income Canadians are suffering most. Food banks nation-wide are experiencing record use, with clients at those charities frequently citing grocery costs and credit card debt as main reasons they need assistance.'We're seeing working families—people with jobs—coming to us for the first time,' said Samir Patel, director of a Toronto food bank. 'They simply can't keep up with the cost of living, and credit cards are a temporary fix that can make things worse.'The government has also instituted targeted relief programs, including the Grocery Rebate, to mitigate the increased cost of food among lower-income families. Critics suggest, however, that these measures are insufficient to tackle the underlying reasons for food inflation as well as the increase in the use of credit.Meanwhile, consumer groups are urging grocery stores and credit card issuers to do more. "We want greater transparency in food prices, and credit card issuers should reduce interest charges or initiate hardship programs for people struggling with necessary expenses," said a spokesperson for advocacy group.With no relief in the near future to high food prices at the grocery store, Canadian financial experts caution consumers against dipping into their credit to pay for everyday items. "It's a bad situation, but getting advice sooner rather than later—whether from a financial counsellor or a community agency—can keep a short-term setback from turning into a long-term crisis," said Harris.With the cost of living increasing, the squeeze on Canadians' pocketbooks—and their credit cards—doesn't let up, and food inflation stands as a signature economic story of 2025.