Even though inflation has been easing, many people still feel like prices are rising faster than ever. Gas seems expensive, groceries are frustrating, and it can feel like our money just doesn’t go as far as it used to.
So why does inflation feel worse than it actually is? The answer lies in psychology — how our brains perceive price changes and how recent experiences shape our financial outlook.
1. We Notice Increases More Than Decreases
When prices rise, it catches our attention immediately — especially for items we buy often, like food or fuel. But when prices stabilize or drop slightly, we tend not to notice.
For example, a $0.20 jump in gas prices feels frustrating, but a $0.10 drop later doesn’t bring the same sense of relief. This “loss aversion” bias makes inflation feel constant, even when it’s cooling.
2. Recent Pain Feels the Sharpest
Inflation surged in recent years to levels not seen in decades. Even though it has since slowed, that experience changed how we think about prices.
We tend to “anchor” our expectations to the recent past — so the price of milk at $7 feels wrong when it was $4 a few years ago, even if incomes and the broader economy have also adjusted.
3. Inflation Affects Essentials More Emotionally
We react more strongly to changes in everyday costs — groceries, utilities, and housing — than we do to discretionary spending.
Even if inflation is falling in other areas, higher grocery bills or rent can dominate our perception of the entire economy.
4. The Real Story Behind the Numbers
According to the Bank of Canada, inflation is currently within its target range of 1–3%. That’s a sign of stability after years of sharp increases.
While prices may not drop back to pre-pandemic levels, the pace of increases has slowed — meaning we’re no longer in a period of runaway inflation.
5. How to Stay Grounded in the “Feeling” Economy
A few ways to keep perspective when everything feels expensive:
Track, don’t guess. Reviewing your spending data over time helps reveal whether costs are actually rising as fast as they seem.
Focus on controllables. You can’t control grocery prices, but you can adjust meal planning, subscriptions, or debt payments.
Stay invested. Historically, diversified portfolios have helped investors outpace inflation over time.
Work with your advisor. We can help review your plan to ensure your investments, insurance, and savings strategies remain on track in today’s economic climate.
Final Thoughts
Inflation affects both our wallets and our emotions. Understanding why it feels worse than it is can help you make better financial decisions — grounded in data, not frustration.
At Brant Financial Group, Assante Capital Management Ltd., we help clients take a balanced view of the economy — focusing on what can be controlled and building financial strategies that stay resilient through every cycle.
