The cost of living has long been top of mind for many Canadians, and a new study from Statistics Canada delves into the differences in purchasing power for residents across the country’s provinces and territories as regional economic disparities continue to grow.
“The standard of living from earning $75,000 in one province or territory is not the same as earning that amount in another province or territory if the cost of living differs in each location,” StatCan said in a release Thursday.
“Regional economic disparities have been increasing in many high-income countries, leading to increased interest in the measurement of economic differences within a country.”
To better understand these differences, the agency conducted a study titled “Purchasing Power Parities for Consumption and Household Income Across the Canadian Provinces and Territories,” the first of its kind.
The study, which focused on data collected in 2021, found that British Columbia, Ontario and Alberta were the provinces with the highest costs of living, while Prince Edward Island and New Brunswick had the lowest.
“Specifically, $1.00 spent in British Columbia purchased the equivalent amount of goods and services as $0.82 spent in New Brunswick,” StatCan said in the release.
Among Canada’s three territories, Nunavut was the most expensive, the study found, and both Nunavut and the Northwest Territories were more expensive than any province.
“In 2021, a person in Nunavut would have needed to spend $1.10 to purchase the equivalent amount of goods and services as $1.00 could purchase in British Columbia, the most expensive province.”
Household income
In addition to measuring the cost of living in each province and territory, the study looked at household incomes to determine how families and individuals handled those costs.
StatCan found that some Canadians earned enough disposable income to offset the high costs of living in their region, while others did not.
“Despite high price levels in Alberta, the province still sat in the top half of the distribution of household disposal income per capita after adjusting income for prices, behind only the Northwest Territories, Yukon, and Newfoundland and Labrador,” the agency said.
“This indicates that high disposable incomes in Alberta compensated for high price levels.”
Meanwhile, Canada’s most expensive provinces, Ontario and British Columbia, were “heavily affected” when nominal incomes were adjusted to account for living costs, according to the study, dropping from fourth and fifth respectively to eight and ninth.
“Manitoba and Nunavut had the lowest disposable income among the provinces and territories, but this was also true before price adjustment,” StatCan said.
‘Social transfers’
The study also examined the value of public services like the quality of healthcare and social supports provided in each province and territory, which again hurt Canada’s two most expensive provinces.
“After adding the value of social transfers in kind, Ontario and British Columbia fared worse, with the second lowest (Ontario) and lowest (British Columbia) price-adjusted income among all provinces and territories,” StatCan said.
Nunavut, on the other hand, fared much better in overall cost rankings when the value of public services was taken into account, according to the study, moving above most provinces and the two other territories.
“Taken together,” StatCan said, “these results suggest that price adjustment and the value of publicly provided services both play an important role in understanding differences in economic well-being between regions.”
