NEW WESTMINSTER, BC, Oct. 25, 2022 /CNW/ – Heading into the pricey holiday season and waiting for another policy rate announcement, the household budgets of Canadians, already impacted by increasing fuel and food costs as well as inflation, are braced for more difficulties. “This financial climate is putting an unprecedented amount of pressure on Canadians,” explained Isaiah Chan, Vice President of Programs & Services at the Credit Counselling Society. “Not only are we facing increasing interest rates and higher incidents of insolvency, but many people are also struggling to pay for necessities, like food and rent. The last few months of the year, always come with a hefty price tag. Holidays and the expenses that come with them, will be yet another source of financial stress, it could be more than many Canadians will be able to manage.”
The Consumer Debt Index, released earlier this month, revealed that over half (52%) of respondents reported it was becoming less affordable to feed themselves and their families. This is an increase of five percentage points over December 2021. Meanwhile, close to half (46%) of Canadians now find themselves closer to insolvency – $200 or less away from being able to cover all their financial obligations. The combined effect of increasing interest rates, rising costs, and inflation have already compelled people to cut back. A survey conducted by the Angus Reid Institute discovered that a whopping nine-in-ten Canadians (88%) reported tightening their belt financially, an eight-point increase from August.
It’s not surprising that these issues have led to a significant drop in consumer confidence. A recent Ipsos survey revealed that overall consumer confidence is now solidly in the negative (–6% versus the norm), down a full five points compared to last month. “Canadians have faced a lot of challenges over the last couple of years – between the Covid-19 pandemic, supply-chain issues, and global unrest. The financial impact has been significant,” shares Scott Hannah, President & CEO of the Credit Counselling Society. “We’re going to be feeling financial reverberations from these events for a long time,” he adds.
The Ipsos Consumer Confidence Survey similarly also found that the significant drop in confidence suggests that things could become worse before they improve. “As households continue to feel the ongoing impact of these financial stressors, it’s going to be crucial that they manage their finances as wisely as possible,” observes Hannah. “For anyone also carrying a large debt load, it will only be that much harder to manage, especially as we get into the 2022 holiday-spending season. If this is your family’s situation, we strongly recommend reaching out right now to get help.”