Canada has a strange problem in 2025. By the official measure, the worst of inflation is over, with headline inflation back near 2 to 3 percent. Yet at the checkout, at the pumps and on rent day, life still feels unaffordable for a lot of households. That gap between the numbers and daily experience is the subject of this video, and it raises a fair question about whether a more expensive normal has quietly settled in for good.
Watch the video above for the full argument in Pete’s own words, then read on for a breakdown of why cooling inflation has not made housing, groceries, gas or everyday imports feel any cheaper.
Why lower inflation does not mean lower prices
The central point is simple. Inflation at 2 to 3 percent does not mean prices are falling. It means prices are still rising, just more slowly than at the peak. A pack of chicken that went up to $8 is not going back to $5 simply because the inflation rate has cooled. The higher price is now the starting point, and the next increase, even a smaller one, builds on top of it.
The same logic applies to rent. A $2,300 monthly rent does not become affordable again because the headline number improved. It stays at $2,300, and for many households that alone makes the rest of the budget feel tight. Nor is a sharp reversal likely to help. The alternative to prices staying high is deflation, a broad fall in prices, and that usually arrives with a recession.
Wages that stood still while prices moved
The wage side makes the squeeze easier to understand. The video points to jobs that were quoted at $18 to $19 an hour on Canadian television in 2005 and notes that many of those same kinds of jobs pay nearly the same in 2025. Two decades later, a similar hourly rate has to cover housing, food and fuel that cost far more than they did then.
Average wages have risen on paper, the video concedes, but not after inflation is taken into account. A pay increase that trails the rise in living costs does not leave a household better off, even if the number on the pay stub looks larger. That is why the video’s closing thought lands: people are working harder just to stay in place.
Housing, groceries and gas
Housing is the biggest pressure of all. Canadian home prices have more than doubled over two decades, even after inflation, a rise the video notes has been worse than in the United States or the United Kingdom. The causes it points to are interest rates, limited supply and population growth, a combination that pushed ownership further out of reach and kept pressure on renters as well. For many people, rent is simply out of reach.
Groceries bring a different concern, competition. Five major chains dominate the Canadian market, and the Competition Bureau has flagged the lack of competition in the sector. When only a handful of large players control most of the shelves, shoppers have few places to turn when prices rise together. Some critics call the result greedflation, the idea that limited competition lets prices stay higher than they otherwise would.
Gas offers a rare example of a cost coming down a little. The federal carbon tax added roughly 14 to 18 cents per litre, and it was removed in 2025, bringing prices down slightly. Even so, Canadians still pay more than Americans for fuel, so the removal softened the bill rather than solving it.
The weak loonie and what comes next
Behind many individual prices sits the weak Canadian dollar. When the loonie is weak, everything imported costs more, from produce to electronics. A household may never think about the exchange rate while shopping, but it is built into the final price on the shelf, which helps explain why some costs stay high even when domestic pressures ease.
The outlook, as the video presents it, is mixed rather than hopeless. Interest rates are starting to come down, and pressure is building for more competition. But relief will be slow, and prices are expected to stay stuck at the new highs, because a sharp fall would likely signal deflation and a recession rather than a healthy correction.
Frequently asked questions
Is inflation back to normal in Canada? Headline inflation has cooled to about 2 to 3 percent, which is closer to normal, but that only means prices are rising more slowly, not that they have returned to earlier levels.
Will rent and grocery prices go back down? The video argues that they are unlikely to fall meaningfully. An $8 pack of chicken is not expected to return to $5, and a $2,300 rent is not expected to become affordable again on its own.
Did removing the carbon tax make gas cheap? No. The tax added roughly 14 to 18 cents per litre and was removed in 2025, so prices came down slightly, but Canadians still pay more than Americans.
Why does the weak dollar matter for everyday shopping? A weak Canadian dollar raises the cost of imported goods, from produce to electronics, so the exchange rate shows up in everyday prices even when shoppers do not notice it directly.
The bottom line
The video’s argument is not that the official numbers are wrong, but that they do not describe how life feels. Inflation can cool while affordability stays poor, because wages have not kept pace in real terms, housing has become far more expensive, grocery competition is limited, and a weak dollar keeps import prices high. The new normal is simply more expensive, and adapting to it matters more than waiting for old prices to return.
For readers rethinking a household budget around that reality, browsing personal finance books for Canadians on Amazon is a practical place to start, with ideas on budgeting and managing money in a higher cost environment.