New federal grocery rebate will cost $12.4 billion, PBO estimates

We don’t need to tell you that food is expensive.

Canadians have been dealing with sticker shock for years as grocery prices have shot up by more than 30 per cent since 2020, according to the most recent data from Statistics Canada.

• What questions do you have about the new federal grocery rebate? Send an email to ask@cbc.ca. 

Last week, Prime Minister Mark Carney announced a suite of affordability measures to help Canadian families who are struggling to cope with the rising cost of living. The flagship measure is the Canada Groceries and Essentials Benefit.

We now know what that will cost. On Monday, the parliamentary budget officer announced that the federal government’s plan to increase the GST credit and offer a one-time payment to Canadians will cost Ottawa an estimated $12.4 billion over five years.

The PBO report estimates the one-time payment will cost more than $3 billion this year, while the annual increases will cost between $1.7 billion and $1.9 billion annually through to 2031.

In its first year, the benefit will give low- and modest-income Canadians eligible for the GST rebate a one-time boost that raises the $1,100 a family of four receives annually to $1,890 and increases the $540 an individual gets to $950.

WATCH | How will the grocery rebate work?:

How will the federal GST grocery rebate work?

Federal politicians made their way to Mississauga Friday to hammer home their grocery rebates, announced Monday by Prime Minister Mark Carney. CBC’s Naama Weingarten explains how the rebate works.

Starting in 2026/27, and running for the next five years, the GST rebate will be increased by 25 per cent, which means a family of four will get up to $1,400 annually, while an individual will get about $700 a year. 

The existing GST credit is paid out quarterly and is targeted at families with low and modest incomes. More than 12 million Canadians are expected to be eligible for the new benefit.

Conservative Leader Pierre Poilievre has previously said his MPs will support the measure, despite calling it a “Band-Aid solution.”

Speaking in Ottawa Monday, co-deputy Conservative leader Melissa Lantsman said the grocery rebate doesn’t do enough, and doesn’t solve the actual problem of rising prices.

“Food prices are out of control and they’re not going down,” Lantsman said.

“No amount of small rebates will help the majority of families, and the majority of those who are struggling with those grocery prices.