A new survey finds many Canadians are shying away from big purchases amid a “summer of sticker shock” that has seen rising interest rates and inflation drive up the prices of everyday items.
Three-quarters of Canadians now say it’s a bad time to make a major purchase, such as a house, car or expensive vacation, according to the survey conducted by the Angus Reid Institute. Only 15 percent said it was a good time and 10 percent weren’t sure.
That’s a big jump from two years ago, when 56 percent said it was a bad time to make a major purchase and 29 percent believed it was a good time.
Although responses varied somewhat by household income, even a majority (71%) of people in households earning $200,000 or more said it was a bad or very bad time to shop important
While consumer confidence is down across the country, the survey found it was highest in Ontario and British Columbia, where respectively 17% and 18% of respondents said they expect the next 12 months to are a good time to make an important purchase. . That compares to eight per cent in Saskatchewan and 11 per cent in Atlantic Canada.
Inflation is around eight percent, well above the central bank’s target of two percent.
Canadians have seen food and energy prices rise amid supply shortages and the war in Ukraine. Rising borrowing costs have also cooled previously red-hot housing markets, with the average cost of a home in the GTA falling for four consecutive months.
Statistics Canada data also shows that car sales for March, April and May are down about 18% compared to the same period last year.
Some 28% of Canadians now describe their personal financial situation as bad or terrible shape, while 72% say it’s in good or great shape. That compares with 20 percent who said their financial situation was bad or terrible in July 2020 and 80 percent who said it was good or great that same year.
Quebec (77%) and Ontario (73%) lead respondents who describe their situation as fair or good, while Manitoba (60%), Saskatchewan and Atlantic Canada (each at 64%) trail.
The survey also found that a majority of Canadians (71%) are watching Bank of Canada rate hikes closely or very closely as the country navigates a period of financial uncertainty. By comparison, another recent poll by Angus Reid found that 56% of Canadians say they are watching the war in Ukraine closely.
The bank has been matching runaway inflation with some of the most aggressive rate hikes seen since the early 1990s.
Only 33 per cent of Canadians trust or very trust that the Bank of Canada is making the right decisions, the survey found.
The issue has recently become politicized in the Conservative leadership race, with one candidate saying he would fire BOC Governor Tiff Macklem.
Only 26% of those who voted Conservative in the last federal election said they trusted the bank to make the right decisions, while 34% of those who voted NDP did. Confidence was highest among those who voted for the Bloc Quebecois (53%) and the Liberals (47%).
The online survey polled 1,606 random Canadians who are members of the Angus Reid Forum. Margins of error are not available for online polls, but a similarly sized probability sample would result in a margin of error of plus or minus two percentage points, 19 times out of 20.