New research paints a sombre outlook for Canadian household finances as inflation takes a bite out of real wages and rising interest rates mute economic growth.

The study by Desjardins says the coming months could be bumpy for household budgets as cracks begin to show in the pandemic recovery.

The fresh research says with the value of many assets at risk and liabilities increasing for Canadian households, the outlook for wealth looks bleak.It says Canadians with lower incomes and greater liabilities will feel the pain before others, with high debt levels and rising interest rates expected to increase consumer insolvency.Yet the study says Canadians are still flush with jobs and income growth is expected to remain robust even as inflation begins to cool.

It says average wages are expected to post solid gains into 2023 as price growth fades, helping curb loan delinquencies and consumer insolvency.

(The Canadian Press)