Canadians cut spending as inflation rises

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A poll of 1,515 Canadians was conducted between March 11 and March 13, but no margin of error can be assigned because online panels are not considered truly random samples. 

According to this poll, Canadians are looking for ways to cut back on spending as their concerns about the rising cost of living outpace headline inflation rates. 

Three-quarters of those polled said they planned to cut back on household purchases and eat at local restaurants less frequently. Almost one-third were considering purchasing an electric vehicle.

Four-fifths of those surveyed in the Leger survey had started or wanted to start purchasing less expensive things at the supermarket to get a good deal on food, as well as decrease how much food they discard to extend each dollar.

One in each two respondents said they were at that point driving less to get a good deal on gas as gas costs proceed to rise, and one in each five said they intended to do as such soon.

Generally speaking, four-fifths of respondents said expansion was essentially affecting their families, and the monetary press is relied upon to deteriorate as expansion rates rise further.

All of this comes as Statistics Canada announced this week that the annual inflation rate in February was 5.7 percent, the highest year-over-year increase in the consumer price index in 31 years. 

The headline rate is expected to rise closer to 6% by the time March’s figure is calculated, as Russia’s unprovoked invasion of Ukraine drives up global oil and wheat prices. 

The situation in Ukraine has surpassed COVID-19 as a top priority for Canadians. 

According to RBC Economics, higher oil prices could cost Canadian households $600 more per year, or $10 billion in total, to buy the same amount of gasoline they did just a few weeks ago.

Low-income households will be hit the hardest, as they typically spend a larger portion of their income on necessities such as food and energy. 

The state of household finances is also a source of concern. While two-thirds of Leger poll respondents said their household finances were in good shape, nearly as many said their earnings had not kept up with the rate of price increases, resulting in a gap in purchasing power. 

In an effort to contain inflation, the Bank of Canada raised its key interest rate to 0.5% this month, the first increase since it slashed the trendsetting rate to an emergency low at the start of the pandemic.

Raising loan fees builds the expense of getting, which might decrease customer interest for a wide scope of products, including homes and cars, as well as the rate at which costs rise.

According to TD Economics, inflation will gradually slow this year, but will likely not reach the central bank’s 2% target until the middle of next year. 

Almost nine out of ten Leger survey respondents expected interest rates to rise, with one-third expecting significant increases in the next six months.

Almost two-thirds of respondents said rising interest rates would be a serious problem for their household to manage.

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