NextFin news, On Friday, October 10, 2025, a report by RBC Economics revealed that wealth inequality in Canada widened during the second quarter of 2025, driven by uneven income growth and savings patterns across different income groups and regions.
The widening gap was primarily due to the weaker housing market limiting wealth gains for less affluent households, while wealthier Canadians saw larger benefits from a strong rebound in equity markets following a weak first quarter. This divergence contributed to a growing disparity in household net worth.
Income inequality remained at record high levels in Q2 2025. However, government transfers to lower-income households helped prevent an even greater widening of the income gap. Average disposable income grew by 3.9 percent year-over-year overall, with the bottom income quintile experiencing a 5.6 percent increase largely due to government support rather than employment earnings.
Despite positive aggregate savings rates, troubling trends emerged within income groups. Lower-income households continued to borrow to cover expenses, while higher-income groups maintained positive savings, albeit at a slower pace. Cost-of-living pressures, especially inflation in necessities such as rent and groceries, disproportionately affected lower-income Canadians, consuming a larger share of their disposable income and limiting financial flexibility.
The national unemployment rate rose significantly in Q2 2025, with younger workers under 35 years old being the most affected. Younger households also experienced slower wealth growth, increasing net worth by only 2.1 percent compared to stronger gains among older households.
Regional disparities persisted, with Ontario and British Columbia leading in higher net worth-to-disposable-income ratios due to expensive real estate markets. These provinces also recorded the highest debt-to-disposable-income ratios, at 212 percent and 195 percent respectively, well above the national average of 182 percent. Alberta ranked third highest at 167 percent.
The wealth gap between the top 20 percent and bottom 40 percent of households widened to 61.5 percentage points, reflecting the uneven impact of economic conditions on different segments of the population.
Abbey Xu, an economist at RBC and author of the report, emphasized that these trends highlight the challenges faced by lower-income Canadians in building wealth amid ongoing economic uncertainties and inflationary pressures.
The RBC report, published on October 9, 2025, is based on comprehensive analysis of household income, savings, and wealth data for the second quarter of 2025. It underscores the importance of targeted government support and economic policies to address growing disparities in Canadian society.
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