The gap between the disposable income of high- and low-income Canadians widened in Q3 2025, according to data Statistics Canada released Thursday. The agency, which measures the difference between households in the top and bottom 40% of income distribution, found a difference of 47.5%, up from 46.3% in the same quarter a year earlier.
Lower income households were negatively affected by declining interest rates and self-employment income. Net saving worsened the most for middle income households, due mainly to weak wage gains. Meanwhile, strong financial market gains benefited wealthy Canadians.
Wages grew by an average of 2.7% in the third quarter of 2025 relative to a year earlier, down from an annual increase of 3.4% in the third quarter of 2024.
The group of households in the bottom 20% of income distribution were the only one that did not increase their average disposable income in the third quarter of 2025 (-0.5%). They also had negative net investment income, as a decline in investment earnings (-$208 or -21.1%) outweighed lower interest payments (-$130 or -8.8%).
On the other hand, average disposable income for households in the top 20% of income distribution increased the most in the third quarter of 2025 relative to a year earlier (4.3%). Their equity and investment fund holdings also saw strong gains, as they tended to benefit more from equity markets rather than from interest-bearing deposits relative to lower income households.
While net savings worsened on average for all households, as growth in consumption expenditure (3.7%) outpaced growth in disposable income (2.7%), it worsened the most for those in the middle 20% of income distribution, falling 56.6% relative to the third quarter in 2024. That group’s average consumption expenditures growth (4.2%) outpaced disposable income growth significantly (0.7%).
Younger households are performing well, with an increase in financial assets and their debt management efforts paying off. Those under 35 saw their wealth grow (7.4%) faster than any other age group relative to a year earlier, mainly from a strong increase in the value of their financial assets (13.2%, compared to 9.6% for all households).
The debt-to-income ratio for those under 35 also fell 1.3 percentage points to 167.2% in Q3. Households with a major income earner aged 35 to 44 had the highest debt-to-income ratio of any age group at 245.4%, but it fell 3.9 percentage points relative to a year earlier. The reductions in the debt-to-income ratio were due to strong income gains that outweighed debt accumulation.