It’s no secret that the growing cost of living has left many British Columbians feeling the pinch in 2024.
With the new year approaching, 2025 appears on track to deliver another round of pocketbook pressure.
Prices on fuel, housing, food and transportation are all expected to rise again.
There may, however, be a few silver linings that could help you to hang on to a little more of your money this year.
What will cost more
Let’s get the bad news out of the way first. There are multiple areas where costs are set to rise in British Columbia for 2025.
Food
The 2025 Canada Food Price Report is forecasting Canadians will pay between 3 per cent and 5 per cent more for food in 2025.
Assuming the highest estimate of 5 per cent, that would leave a family of four paying over $16,833 for food next year, up $801.45 from 2025. It cites “climate events, labour disputes, new policies, the U.S. election, and exchange and interest rates” for the increases.
The report estimates the highest increase of 4 per cent to 6 per cent on meat, increases of 3 per cent to 5 per cent on vegetables and restaurant meals, and the lowest increases of 1 to 3 per cent on seafood and vegetables.
On the plus side, the report projects B.C.’s increases will be below the national average. Actual food inflation for B.C. in 2024 came in at 2.8 per cent, at the low end of the report’s 2024 projection of 2.5 per cent to 4.5 per cent.
The federal excise tax on alcohol is also set to climb in 2025, though has been capped at 2 per cent by the federal government.
Housing
Renters in B.C. will pay more in 2025, as the province’s maximum allowable rent increase is set to rise to 3 per cent.
The BC Real Estate Association estimates the average selling price of a home provincewide will climb by 3.3 per cent next year.
B.C.’s new home-flipping tax will also go into effect on Jan. 1, 2025.
This means that anyone who sells a home within a year of purchasing it will have to pay a 20 per cent tax rate on the profit.
That percentage drops to 10 per cent after 18 months and then down to zero after the person has owned the property for more than two years.
Property taxes are slated to rise by varying numbers across B.C. municipalities, with the Vancouver rate pegged at 3.9 for 2025.
But Metro Vancouver homeowners will be hit with a whopping 25.3 per cent average utility fee hike (an increase of $177), driven largely by massive cost overruns on the North Shore Wastewater Plant, while residents of the North Shore will pay even more.
Energy
While it’s impossible to predict what oil markets will do to the cost of fuel in 2025, particularly amid global instability, there is one area where British Columbians can expect to see an increase: the carbon tax.
Under the next scheduled increase in the tax, set for April 1, the tax on gasoline will increase from 14.51 cents per litre to 20.91 cents per litre.
The cost of heavy fuel oil will increase from 25.5 cents per litre to 30.28 cents per litre, and the cost of propane will climb from 12.38 cents per litre to 14.7 cents per litre.
B.C.’s carbon pricing, however, could be repealed as early as this year — depending on what happens in Ottawa.
During the 2024 provincial election campaign, B.C. Premier David Eby pledged to scrap the tax if the federal government removes its requirement for provinces to have one.
On Jan. 1, FortisBC will also raise its natural gas rates by 5.65 per cent, an increase of about $7.88 to the average monthly bill.
BC Hydro says it is still finalizing its 2025 rate application.
Transportation
Transit riders will be looking at fare hikes in 2025, varying depending on where they live.
Some BC Transit riders will see the biggest hikes. As of April 1, BC Transit is introducing a 20 per cent fare hike to single rides (up from $2.50 to $3) and day passes (from $5 to $6). Monthly passes will be unaffected.
TransLink is also raising fares by 4 per cent on July 1, up from $2.86 to $2.75.
Potential changes to the cost of auto insurance remain unclear at this point.
Basic rates have not increased since 2019, and the government has frozen current rates until at least April 1, 2025.
BC Ferry fares will climb by 3.2 per cent on April 1.
Ferry rates have been capped at 3.2 per cent through 2028, due to a one-time $500 million cash injection from the provincial government.
However, the company’s CEO has warned those fares could jump by as much as 30 per cent in 2028 due to a “growing funding gap.”
Cash back
There are, fortunately, a few financial bright spots for British Columbians to look forward to in 2025.
Here are a few ways the year ahead could be less expensive for some.
GST ‘Holiday’
The federal government’s GST holiday took effect on Dec. 14, saving British Columbians 7 per cent on some items.
The tax break will run until Feb. 15, 2025.
It covers prepared foods that weren’t already tax-exempt, as well as many non-alcoholic drinks, beer, wine, cider, and sake.
Various kids’ items and toys, physical video games and consoles and paper books are also covered.
B.C. tax rebate
During the provincial election campaign, the B.C. NDP pledged to roll out tax rebates for British Columbians in 2025.
The initiative will see individuals receive $500 and families receive $500.
The exact timing of the rebate is unclear, but it is expected when the government returns to the legislature for its spring sitting.
Carbon tax rebates and family benefits
In its 2024 budget, the BC NDP boosted both its carbon tax rebate and B.C. family benefit, with increased payments to continue through June 2025.
The province estimates the average family will see $445 more throughout the family benefit bonus period, with a family of four getting about $1,760 and an average single-parent family getting about $2,790.
The maximum payout for the annual climate action tax credit payment rose from $447 to $504, from $223 to $252 for a spouse or partner, and from $111.50 to $126 per child.
Insured mortgage cap hike, 30-year amortization
New changes to Canadian mortgage rules will make it more affordable for some B.C. homebuyers.
Under the new rules, the insured cap for a mortgage climbed to $1.5 million from $1 million.
That means that buyers will have an easier time saving for a home in some of Canada’s most expensive markets, such as Toronto and Vancouver, where property values routinely rise above $1 million.
The introduction of an amortization period of 30 years, up from the typical 25 years, for first-time and new-build homebuyers also lowers the bar to qualify for a mortgage and reduces the size of monthly payments, even as owners are likely to owe more over the lifetime of the mortgage.
Interest rates
The Bank of Canada unveiled a fifth-consecutive rate cut last week, leaving its key interest rate at 3.25 per cent.
Bank of Canada governor Tiff Macklem said the central bank has now “substantially” cut its policy rate since June, and that Canadians should not expect as rapid a pace of cuts in the months to come.
Nonetheless, the bank’s key rate is down substantially from where it stood at 5 per cent this time last year, meaning mortgage and other debt holders stand to face less financial pressure for the time being.
