Inflation may be cooling on paper, but for many Canadians, the cost of living is rising again where it hurts most – food, rent, and housing costs.
As Canada heads into 2026, new forecasts show food prices increasing once again, adding pressure to households already stretched by high rents and elevated mortgage payments. While inflation headlines often focus on interest rates, the reality is that affordability is no longer about housing alone.
It is about groceries plus rent plus mortgages – all at the same time.
Food Prices Are Rising Again in 2026
According to Canada’s Food Price Report, grocery prices are expected to rise between 4 and 6 percent in 2026, following years of cumulative increases that have already reshaped household budgets.
Key drivers include:
- Higher transportation and fuel costs
- Climate-related impacts on food production
- Increased labour and supply chain expenses
- Ongoing global price volatility
For many households, food is now one of the fastest-growing monthly expenses, reducing flexibility elsewhere in the budget.
Why Food Inflation Matters for Housing Affordability
Housing affordability does not exist in isolation. Lenders, landlords, and policymakers may analyze housing costs separately, but households experience affordability as one combined monthly reality.
When food costs rise:
- Less income is available for rent or mortgage payments
- Savings rates decline
- Emergency buffers shrink
- Debt reliance increases
Even if housing costs stabilize, rising grocery bills still make housing feel less affordable.
Renters Feel the Squeeze First
Renters are often the most vulnerable to rising food prices because:
- Rent is a fixed monthly cost
- Food is a non-negotiable expense
- Wage growth has not kept pace with either
As grocery bills rise, renters have fewer ways to absorb the shock. This increases:
- Missed rent risk
- Household debt
- Demand for rental assistance
In high-cost provinces like Ontario and British Columbia, renters are already spending a historically high share of income on housing before factoring in food inflation.
Mortgage Holders Are Not Immune
Homeowners may appear more insulated, but food inflation affects mortgage holders as well.
For households facing:
- Mortgage renewals at higher rates
- Variable-rate payment increases
- Rising property taxes and utilities
higher grocery costs further tighten monthly cash flow.
This is especially significant for recent buyers who purchased near peak prices and now face higher carrying costs across the board.
Why Inflation Still Feels High Even When CPI Cools
Headline inflation numbers may show moderation, but core household expenses continue to rise.
This disconnect exists because:
- Shelter and food remain sticky inflation categories
- Rate cuts do not immediately lower mortgage payments for most households
- Grocery prices rarely decline meaningfully once increased
As a result, Canadians may technically experience lower inflation, while still feeling poorer month to month.
How This Affects Housing Demand
When food and housing costs rise together:
- First-time buyers delay purchases
- Renters stay renters longer
- Household formation slows
- Housing mobility declines
This does not necessarily cause prices to crash, but it reduces affordability and increases financial stress, reinforcing inequality between those already housed and those trying to enter the market.
Why This Matters for the Housing Crisis
Canada’s housing crisis is often framed as a supply issue, but affordability is increasingly a cost-of-living problem.
Even if:
- More homes are built
- Interest rates fall modestly
- Prices stabilize
housing will remain unaffordable for many households if everyday expenses continue to climb faster than incomes.
Food inflation amplifies housing stress rather than replacing it.
What to Watch Heading Into 2026
Key indicators to monitor include:
- Grocery price inflation trends
- Wage growth relative to cost of living
- Mortgage renewal impacts
- Rental assistance and affordability supports
If food prices continue rising alongside housing costs, affordability pressures may worsen even without another housing price surge.
Conclusion
The 2026 inflation reality is clear: food prices are rising again, and that matters deeply for housing affordability.
Affordability is no longer just about what homes cost. It is about whether households can manage groceries, rent, and mortgages at the same time. As these pressures combine, housing stress becomes a broader cost-of-living crisis – one that rate cuts alone cannot solve.
References
Dalhousie University Agri-Food Analytics Lab. (2025). Canada’s Food Price Report 2026. https://www.dal.ca
Statistics Canada. (2025). Consumer Price Index, food and shelter components. https://www.statcan.gc.ca
Canada Mortgage and Housing Corporation. (2024). Housing affordability indicators. https://www.cmhc-schl.gc.ca
Bank of Canada. (2025). Inflation trends and household spending. https://www.bankofcanada.ca
Parliamentary Budget Officer. (2025). Household affordability and inflation pressures. https://www.pbo-dpb.ca
Canada Housing Market 
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