What are five expenses that will cost Canadians more in the second half of 2026?

Rewritten on July, 27, 2026 by Aya Al-Hakim | Written originally by Shaistha Khan on Jan. 4, 2024

Higher gasoline prices, food costs that continue to outpace inflation, mortgage renewals, rising insurance premiums, and labour-related expenses are expected to put added pressure on Canadian household budgets through the second half of 2026. 

While overall inflation has moderated compared with the peak levels seen in recent years, Canadians are still feeling the squeeze when paying for essentials. Ongoing geopolitical uncertainty, supply chain disruptions, and elevated input costs continue to affect everyday expenses. 

We look at five costs likely to strain household finances in the months ahead and what Canadians can do to manage them. 

1. Transportation and energy 

Transportation and energy costs are expected to be one of the biggest affordability challenges facing Canadians in the second half of 2026 due mainly to the ongoing conflict in the Middle East. 

"The biggest short-term challenge for Canadian families is the elevated price of gasoline resulting from the ongoing conflict in Iran," says Colin Mang, an economics professor at McMaster University.

Statistics Canada reported that gasoline prices were up 20.5% in June compared with a year earlier, a slower increase than the 33.2% annual jump recorded in May. Month over month, prices at the pump fell 10.2%, marking the biggest decline since April 2025 after the federal consumer carbon levy was removed. 

"While we saw oil prices and gasoline prices in June fall back to levels just above their pre-war values, renewed hostilities have caused both to rise back up again and that extra cost will squeeze family budgets,” Mang explains.  

Transportation costs ripple through the broader economy by increasing shipping and distribution expenses, which can ultimately raise prices for consumer goods and services. 

Canadians who rely on public transit aren't getting relief either. In Metro Vancouver, for example, TransLink raised fares by an average of about 5% on July 1, 2026, leading transit advocates to call for a low-income transit pass to help offset the rising cost of local travel.  

In Ottawa, OC Transpo raised single-ride fares by 10 cents on January 1, and Calgary and Edmonton also increased fares in early 2026 as transit agencies grapple with rising operating costs. 

Saving tips: With relief at the pump unlikely in the near term, managing transportation costs will require Canadians to be more deliberate about how and when they travel. Here are some ways to save: 

• Check if you qualify for discounted fares that most transit agencies offer for seniors and students. Monthly passes make travel more affordable. 
• Check gas savings on credit card programs that offer discounts in the form of points or reduced per-litre costs. 
• Try to wrap as many errands into a single trip to cut down on gasoline costs. 
• Consider carpooling whenever possible. 

2. Groceries and dining out 

Grocery prices continue to rise faster than overall inflation, making food an ongoing budgeting strain facing Canadian households. 

According to Statistics Canada, grocery prices rose 3.9% in June compared with a year earlier, down from a 4.3% increase in May. Despite the pullback, June marked the 17th straight month that food costs at the grocery store climbed faster than overall inflation. 

Mang points to two factors driving costs higher: tight supplies and rising agricultural expenses. "Poor growing conditions over the winter pushed up the price of some fruits and vegetables through the spring," he says. A declining cattle stock has driven up the price of beef, Mang adds, which also caused consumers to switch to less expensive proteins like pork and chicken, causing their prices to rise as well. 

The long-term outlook remains concerning, with the Middle East conflict adding a new layer of strain on the food supply chain. "Rising fertilizer prices resulting directly from the disruption to fertilizer exports from the Middle East are raising costs for farmers, and that indicates further trouble ahead for food prices," says Mang. 

Those rising costs fall hardest on the most vulnerable. According to Statistics Canada's Canadian Income Survey, released in April 2026, approximately 9.8 million Canadians—including 2.4 million children—lived in a food-insecure household in 2025. These numbers ranked among the highest levels recorded in two decades of tracking food-insecurity in the country. 

"Grocery price affordability will be the long-term affordability challenge that Canadian families will face over the coming year," says Mang. 

Saving tips:  

• Compare unit prices rather than package prices; buy in-season produce when possible.  
• Consider lower-cost protein alternatives. 
• Plan meals in advance to reduce food waste. 
• Take advantage of loyalty programs, price matching, and weekly promotions. 
• Consider takeout instead of dine-in when it fits the occasion. 

3. Mortgage renewals 

The mortgage renewal crunch facing Canadian homeowners is far from over. The Bank of Canada estimates that about 60% of outstanding mortgages will renew over 2025–2026, leaving many borrowers to adjust to significantly higher borrowing costs. 

Homeowners who locked in five-year fixed mortgages in 2020 and 2021 are seeing the biggest shock. According to the Bank of Canada, their monthly payments typically rise by 15% to 20% when they renew. 

However, Mang noted that the picture is more nuanced than it was a year ago. 

"At this point, many of the ultra-cheap pandemic-era loans have already renewed at higher rates," he said. "We're also seeing three-year and four-year loans signed in 2022 and 2023 respectively renew at lower rates now, which cuts payments and gives those families some extra cash each month." 

Still, some homeowners remain exposed to significant increases, particularly those who locked into five-year variable-rate mortgages in 2021, and didn't make additional payments to offset higher interest costs that followed. 

“They are now significantly behind on their amortization schedules and will renew this year with substantially higher mortgage payments,” says Mang. "For families that are facing a large jump in mortgage payments, it adds further pressure at a time when food and transportation costs are also rising." 

The strain is already showing up in household finances. Equifax Canada's Q1 2026 Market Pulse found mortgage delinquency balances were up about 32% year-over-year nationally and 52% in Ontario. Consumer insolvencies have also reached their highest level since 2009. 

Adding to the pressure, the Bank of Canada held its overnight rate at 2.25% on July 15 for a sixth consecutive decision, suggesting little immediate relief for homeowners approaching renewal. 

Saving tips:  

• Shop around before renewing your mortgage and compare lenders and terms. 
• Consult a mortgage broker to explore your options. 
• Pay down high-interest debt to improve your credit standing. 
• Review whether a shorter term or different mortgage structure better suits your financial situation. 

Read more: 3 ways to make your mortgage more affordable at renewal 

4. Home and auto insurance 

Insurance is another household expense that has become noticeably more expensive in recent years, with both homeowners and drivers facing steadily rising premiums. 

Home and auto insurance costs continue to rise in 2026 as insurers grapple with increasing claims from extreme weather, higher repair and rebuilding costs, and ongoing vehicle theft. According to Statistics Canada, home insurance premiums rose 45% between December 2019 and December 2025, while auto insurance premiums increased nearly 23.9% over the same period. 

Much of that increase stems from the growing cost of insured losses across Canada. Steven Harris, a licensed insurance broker and LowestRates.ca insurance expert, says increasingly severe weather events continue to put pressure on insurers. 

"Insurance is a pool of premiums of the many, to cover the losses of a few," says Harris. "We're seeing more severe and extreme weather events, including flooding, wildfires, and windstorms. The severe catastrophic losses cost hundreds of millions and in some cases over a billion dollars in damage, meaning the premiums charged to consumers need to keep up with losses." 

The industry has absorbed a string of costly disasters in recent years. Severe weather events generated more than $2.4 billion in insured damage in 2025, according to CatIQ data cited by the Insurance Bureau of Canada, making it the country's 10th-costliest year for weather-related losses. 

Premiums are also being pushed higher by inflation, labour costs, and rising construction costs, all of which make claims more expensive to settle and damaged properties more costly to rebuild. 

Many consumers are surprised to see their premiums increase despite maintaining a claim-free record. Harris says insurance pricing is influenced by broader trends that extend beyond an individual's claims history. 

"Home insurance is a shared risk pool, and the costs of the premium are reflected in your region, the type of home, age of home, and trends impacting all of them," he says. "Even with a claim-free record, insurance costs can be raised if there is an increase cost in rebuild values, claim frequency, and severity." 

Savings tips: 

• Bundle your home and auto insurance policies to qualify for multi-policy discounts. 
• Check whether your employer, professional association, or retiree organization offers preferred insurance rates. 
• Speak with an insurance broker to ensure you're receiving all eligible discounts, including claims-free, monitored alarm systems for fire/water/burglary, and multi-policy discounts. 
• Consider home upgrades that reduce the risk of damage and future claims, such as installing a backwater valve or upgrading to impact-resistant roofing materials. 
• Review your coverage regularly to ensure it reflects your current needs and isn't costing more than necessary. 

These measures can help lower both the likelihood of a claim and overall cost of coverage. 

Read next: How expensive is it to insure one of Canada's top 10 most stolen vehicles? 

5. Services and labour 

Labour shortages continue to push up costs in sectors that rely on skilled workers, and those added expenses are often passed on to consumers. 

The pressure is expected to continue. RBC Economics warns that Canada's aging population, rising number of retirements, and lower immigration targets will slow labour force growth in the years ahead. 

The impact is particularly evident in the insurance industry. Harris says a shortage of skilled tradespeople is making it more expensive to repair and rebuild homes after damage. 

"Home insurance is a promise to restore your property after a loss, and a shortage of skilled trades in residential construction is making that more expensive," says Harris. "Fewer available workers means repairs and rebuilds take longer, and tighter labour supply drives up the cost of that labour." 

The Insurance Bureau of Canada has repeatedly identified skilled-trades shortages as a growing challenge for the industry. A Conference Board of Canada report prepared with the IBC found that labour shortages increase claims costs by raising repair expenses and extending rebuilding timelines. 

"Insurance premium reflects not just the odds of a claim, but what that claim costs to settle today," Harris says. "As long as skilled trades stay scarce, that pressure stays built into pricing." 

Saving tips: 

• Compare quotes before hiring contractors. 
• Book preventative maintenance to avoid costly repairs later. 
• Ask whether businesses offer discounts for cash payments, off-peak appointments, or bundled services. 

What Canadians can do to manage rising costs

Cost-of-living pressures are unlikely to disappear anytime soon. While gasoline prices may eventually ease if geopolitical tensions subside, Mang believes food affordability will remain a key challenge for Canadian households. 

"We're going to continue to experience cost-of-living challenges over the coming year," he says, adding that higher grocery bills and transportation costs will squeeze family budgets. 

Mang encourages families to look closely at their options—combining errands into single trips to reduce fuel costs, comparing alternatives at the grocery store, and identifying any expenses that can be trimmed from their household budget. 

While Canadians cannot control inflation, fuel markets, or global conflicts, they can take steps to make their budgets more resilient. Whether it's shopping more strategically, reviewing insurance coverage, renegotiating mortgage terms, or reducing transportation costs, small adjustments can add up to meaningful savings over time.