A new survey reveals that Canadians are increasingly worried about their financial situation, with concerns over inflation, income levels, and a potential recession growing at the year’s midpoint.
According to TransUnion’s Canada consumer pulse study for Q2 2024, 57% of Canadian households reported that their incomes are not keeping pace with inflation, while 38% expect their bill and loan payments to rise in the next three months. This has led to changes in saving habits, with many increasing their emergency funds, relying more on credit, or adjusting their retirement savings.
Key findings include:
- 46% of Canadians feel their finances are worse than planned this year, up four percentage points from last year.
- Despite 79% reporting stable or increased income in the last three months, financial optimism has waned.
- 58% of respondents are not optimistic about their household finances over the next 12 months.
- Nearly two-thirds believe Canada is either in a recession or will enter one by year-end.
Matthew Fabian, director of financial services research at TransUnion, noted that the prolonged high cost of living and interest rates are eroding disposable incomes, adding to financial stress.
Inflation remains a top concern, with 86% listing it among their top three financial worries for the next six months. Although inflation has eased from last year, the cost of essentials like groceries and gasoline continues to burden consumers. Statistics Canada reported a slight rise in the annual inflation rate to 2.9% in May, with grocery prices up 22.5% compared to four years ago.
Fabian highlighted the dilemma faced by many Canadians: prioritizing essential expenses over paying down debt, which exacerbates financial strain.
The survey also found that 27% of Canadians plan to apply for new credit or refinance existing credit within the next year, up four percentage points from the previous quarter.
This report by The Canadian Press was first published on July 9, 2024.