With inflation at a 39-year high, and banks raising interest rates to avert economic recession, many Canadians are said to be anxious and discouraged as they shrink to deal with rising cost of living.
A new nonprofit Angus Reid Institute study shows that 45 per cent of Canadians believe they are worse off now than at that time last year. Inflation is now 7.7%, the highest since 1983.
With food and gasoline prices skyrocketing, Canadians are trying to spend less as their personal costs increase. Nearly half say they are now looking for alternative modes of transportation to avoid filling up their gas tanks.
“A lot of people are worried,” David Chilton, author of the self-help book The Wealthy Barber, said in an interview with CBC News Network.
Chilton noted that people on low incomes are especially affected by price rises because they spend a disproportionate percentage on commodities such as food and gas.
According to the study, half of Canadians say it has been difficult to pay their typical grocery bills.
“I would say inflation numbers, as high as are being reported today, are likely to be higher, frankly,” Chilton said.
“Anyone who goes to the grocery store I think would agree with that.”
“Rates will go up until they break something”
The Bank of Canada has aggressively raised interest rates in its efforts to calm inflation, with a rise in March to 0.5% (the first since 2018) followed by another in April up to 1%.
In June, the bank raised its benchmark interest rate for the third time this year to 1.5 percent and indicated several more hikes are approaching. The increases are intended to encourage savings and discourage debt in an overheated economy.
MIRAR | 45% of Canadians say they are worse off financially than last year: study
45% of Canadians say they are worse off financially than last year: study
A study by the Angus Reid Institute suggests that nearly half of Canadians say they are worse off economically now than they were a year ago, and 34% believe they will be worse off next year.
As a result, 22 per cent of Canadians with a mortgage say their payments have increased; more than half say they expect theirs to go up, according to the report.
An increase of $ 150 a month would be difficult for more than a third of homeowners, but raising that number to $ 300 would be totally unaffordable, he said at 66 percent, forcing them to seriously consider a change of plans.
Tenants also feel slim, with more than half saying paying a monthly rent is difficult.
MIRAR | Wealthy Barber author talks about how rising inflation is affecting Canadians:
The author of Wealthy Barber talks about inflation, fears of recession and more
David Chilton, author of The Wealthy Barber, looks at how high gasoline prices and grocery bills amid stagnant wages have affected low-income Canadians the most.
“I think you’ll see central banks around the world continue to raise rates” to contain inflation, Chilton said.
“It’s affecting people and I think they’re going to raise rates until they break something.”
When it comes to placing their trust in the Bank of Canada, Canadians are divided: just under half (46%) say they believe the bank is properly fulfilling its mandate, while a little less (41%) they say they believe the opposite.
Three-quarters of Canadians are dissatisfied with the way provinces have handled rising inflation.
The study, conducted online, surveyed 5,032 Canadian adults who are members of the Angus Reid Forum, June 7-13. For comparison purposes, a probabilistic sample of this size has a margin of error of +/- 2 percentage points, the no-said profits.
In April, while announcing a rate hike, Bank of Canada Governor Tiff Macklem told reporters the bank is trying to anchor inflation expectations.
“The longer inflation stays well above our target, the greater the risk that Canadians will begin to think that this higher inflation will persist, and this is in line with their inflation expectations.”
“The need to ensure that inflation expectations remain anchored in our two per cent target was reflected in our decision today.”
About two in five Canadians also have credit card debt, and that number rises to 62 per cent among those who rated themselves as “in trouble” on the Angus Institute’s economic stress index Reid.
Within that group, about 58 percent say it will take more than a year to pay off those debts.
It’s a very “unusual” moment, Chilton says.
“I think everyone has to be approached from their individual perspective … I always think you have to keep an eye on your costs, but that’s more true now than ever.”