New Statistics Canada data show income and wealth inequality rising despite overall gains in household net worth
Canada’s household economic picture is becoming increasingly uneven, with higher-income households pulling further ahead while lower- and middle-income groups face growing pressure.
The latest Distributions of Household Economic Accounts from Statistics Canada for the third quarter of 2025 highlight trends that could shape client planning conversations around income stability, saving capacity and long-term wealth accumulation.
The gap in disposable income between households in the top 40% and those in the bottom 40% of the income distribution increased to 47.5 percentage points in the third quarter, up from 46.3 percentage points a year earlier. This expansion reflects a combination of slower labour market conditions, easing inflation and declining interest rates, all of which affected households differently depending on their income sources and asset mix.
Households in the lowest income quintile experienced a year-over-year decline of 0.5% in average disposable income. While wages rose for this group, the gains were not enough to offset declines elsewhere.
As Statistics Canada noted, “a relatively strong wage gain (+$152 or +5.7%) was offset by reductions in self-employment income (-$67 or -3.4%) and net investment income (-$78 or -16.0%).”
At the other end of the spectrum, the top 20% of income earners saw disposable income rise by 4.3%. Stronger wage growth, a significant increase in self-employment income and continued exposure to equity markets supported this group’s results. Investment income and financial market performance continued to play a meaningful role in widening the income divide.
Overall household net saving declined in the quarter as consumption grew faster than disposable income. Middle-income households were hit hardest, with net saving dropping by more than 50%, reflecting modest income growth alongside rising spending on housing, transportation and services. In contrast, the highest-income households increased net saving by 6.7%, as income gains outpaced consumption growth.
The top 20% of households held 65.5% of total household net worth in the third quarter, with average net worth of roughly $3.5 million per household. Meanwhile, the bottom 40% accounted for just 3.1% of total net worth, averaging about $82,100 per household. The resulting wealth gap widened to 62.4 percentage points.
Overall household net worth rose 5.5% during the quarter, largely driven by gains in financial assets such as equities and investment funds. Increases in real estate and consumer durable goods were more modest, while household liabilities continued to rise.
Younger households under age 35 recorded the fastest growth in average net worth, up 7.4%, supported by financial asset gains and housing appreciation. However, they also faced rising interest portions of debt payments, highlighting ongoing affordability and cash-flow challenges.
