Inflation in Montreal is slowing down, but residents will still feel its effects in several areas in 2025. From higher grocery bills to rising vehicle registration fees, here’s a breakdown of how inflation, cost-of-living adjustments, and economic changes will affect Montrealers this year.
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Grocery Prices Are on the Rise
Montrealers should brace for higher food costs in 2025. According to Canada’s Food Price Report, food prices are expected to increase by 3–5%. For a family of four, this translates to an annual grocery bill of $16,833.67, up by more than $800 compared to last year.
Some categories will see sharper increases:
- Meat Prices: Up by 4–6%, driven by shrinking cattle herds and higher feed costs.
- Vegetables: Expected to rise 3–5% due to the weaker Canadian dollar.
- Restaurant Prices: Projected to increase 3–5%, as businesses face rising insurance, labor, and interest costs.
- Bakery and Dairy Products: Prices are set to climb by 2–4%.
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Vehicle Registration Fees Surge to Fund Public Transit
Drivers in Greater Montreal will see a significant jump in vehicle registration fees, from $59 to $150. This increase, announced by the Communauté métropolitaine de Montréal, is part of an effort to address a funding deficit for public transit.
Electricity and Municipal Taxes See Moderate Increases
- Electricity Rates: Hydro-Québec will adjust electricity rates upward starting April 1.
- Property Taxes: Residential property taxes will rise by an average of 2.2%, translating to an additional $135 for a home valued at $720,000. Increases vary by borough, with Pierrefonds-Roxboro facing the highest hike at 4.6%.
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Quebec Pension Payments and Tax Brackets Adjusted
There’s some good news for retirees:
- Quebec pensions will increase by 2.6%.
- Average payments at age 65 will rise from $682 to $700 per month.
- Payments for those retiring at age 60 will increase from $457 to $469 per month.
Tax Brackets:
Tax thresholds are rising by 2.85%, allowing Quebecers to save hundreds of dollars. The basic personal exemption increases to $18,571, and the first income bracket threshold rises to $53,255.
Housing Market: Prices Continue to Climb
Montreal’s housing market is heating up, with the median price of single-family homes rising 11.2% to $600,000. Condominiums and plexes also saw gains, with prices increasing by 7.6% and 5.3%, respectively.
The Bank of Canada’s five consecutive interest rate cuts in 2024, bringing the key rate to 3.25%, are expected to spur home sales. However, this could drive prices even higher, with Quebec home prices predicted to rise by 7% in 2025, outpacing the national average of 4.4%.
Salary Increases: A Mixed Bag
Quebec employers plan to increase wages by 3.3% on average in 2025. While this is slightly below the 3.7% granted in 2024, it exceeds pre-pandemic averages. Notably, many employers aim to outpace inflation, which is forecasted to decrease to 2% this year.
Air Travel: New Fees for Budget Flyers
Air Canada is adopting discount-carrier tactics for its lowest-fare customers:
- Carry-on bags will incur a $35 fee for the first item and $50 for the second.
- Seat selection will also come with an added cost for basic fare passengers.
Inflation Outlook for 2025
Quebec’s inflation rate dropped to 1.6% in October 2024, down from 4.2% the previous year. Experts anticipate a further decline to 2% in 2025. The Bank of Canada’s cautious approach to rate cuts suggests a gradual recovery for the economy.
While inflation may be moderating, Montrealers will still face higher costs in various areas. From rising food and housing expenses to increased vehicle registration fees, careful budgeting will be essential in 2025. However, modest tax savings, pension increases, and steady wage growth could help offset some of these challenges.
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