PBO Flags $12.4B Price Tag for Canada’s New Grocery Relief Program

Canada’s plan to expand financial relief for households facing rising grocery bills will carry a $12.4-billion cost over six years, according to a new assessment from the Parliamentary Budget Officer (PBO).

The estimate follows a policy rollout announced on Jan. 26 by Prime Minister Mark Carney, who unveiled an enhanced GST credit and a one-time payment, now collectively branded as the Canada Groceries and Essentials Benefit.

The proposal includes a 25 per cent increase to the GST credit for eligible Canadians, along with a single top-up payment this year worth half of the annual GST credit. The government says the changes are designed to provide immediate help to households squeezed by higher everyday costs, particularly food.

Carney has said the renamed benefit will channel extra cash to more than 12 million Canadians, putting “hundreds of additional dollars” directly into their bank accounts.

The PBO’s report outlines the fiscal impact of the plan – More than $3.1 billion is expected to be spent this year on the one-time payments alone, The permanent increase to the GST credit is projected to cost nearly $1.8 billion in the next fiscal year and By 2031, the annual cost of the enhanced GST credit is estimated to reach about $9 billion

The analysis compares the proposed measures with a baseline scenario in which the GST credit remained unchanged.

According to the prime minister, the expanded benefit will noticeably raise support for families. A household of four that currently receives about $1,100 a year through the GST credit could see payments rise to as much as $1,890 this year, followed by roughly $1,400 annually in subsequent years.

The announcement comes amid stubbornly high grocery prices. Food inflation jumped five per cent in December compared with a year earlier, more than twice the pace of overall inflation, adding pressure to household budgets.

Alongside the short-term cash support, Carney said the government is working on a national food security strategy aimed at tackling deeper issues such as boosting domestic food production and improving access to affordable, nutritious food over time.

While the benefit promises near-term relief for millions of Canadians, the PBO’s report underscores the significant long-term cost the program will add to federal finances.