Disposable income grew by an average of 3.9% year over year in the second quarter of 2025, slowing from a 5.9% rise in the same quarter last year, according to Statistics Canada data released Thursday.
Disposable income for the lowest quintile of income households grew at a faster-than-average pace (5.6%), mainly from an increase in government transfers. The lowest income households saw a drop in investment earnings (-21.2%), mostly from interest-bearing deposits, that outweighed lower interest payments (-8.1%).
Average disposable income for the highest quintile of income households increased at a below average pace (3.1%), primarily from a relatively weak gain in average wages. Their net investment income increased at the fastest pace of any income group, due largely to a large reduction in interest payments relative to a year earlier (-9.6%).
Net savings worsened for households across income distributions in the second quarter of 2025 relative to a year earlier, for the first time since 2022 when inflation hit a 40-year high. Weak wage gains did not keep pace with household spending growth, especially for necessities like housing, transport and groceries.
Household net savings for the highest income quintile averaged $16,824 for the second quarter, compared to $17,202 in the same period in 2024. For the lowest income quintile, the figure was -$10,107, down from -9,672 in Q2 last year.
The wealth gap increased as the wealthiest benefited the most from financial market gains. The top quintile of households increased their net worth by 4.9% compared to the same quarter last year, while the bottom 40% grew their net worth by 4.7%.
The top quintile of households accounted for 64.8% of Canada’s total net worth in the second quarter of 2025, averaging $3.4 million per household. Meanwhile, the bottom 40% of households accounted for 3.3%, averaging $86,900.