With inflation peaking at a 39-year high – and banks raising interest rates to avoid an economic recession – many Canadians are said to be worried and frustrated as they shrink to manage rising living costs.
A new study by the non-profit sociological organization Angus Reid Institute shows that 45% of Canadians think they are worse now than they were last year. Inflation is now 7.7 percent, the highest since 1983.
As food and gas prices rise, Canadians are trying to spend less as their personal expenses increase. Nearly half say they are now looking for alternative modes of transport to avoid filling their tanks with gas.
“A lot of people are worried,” said David Chilton, author of The Wealthy Barber’s self-help book, in an interview with CBC News Network.
Chilton noted that low-income people are particularly affected by rising prices because they spend a disproportionate percentage on basic necessities such as food and gas.
According to the survey, half of Canadians say it has been a challenge to afford typical food bills.
“I would argue that inflation figures, as high as they are reported today, are probably higher, to be honest,” Chilton said.
“Anyone who goes to the grocery store thinks I will agree.”
“They will raise interest rates until they break something”
The Bank of Canada is aggressively raising interest rates in an effort to calm inflation, rising to 0.5% in March (the first in 2018), followed by another in April to one percent.
In June, the bank raised its base interest rate for the third time this year to 1.5% and said several more increases were forthcoming. The increases are intended to encourage savings and discourage borrowing in an overheated economy.
WATCH | 45% of Canadians say they are in a worse financial position than last year: a survey
45% of Canadians say they are in a worse financial position than last year: a survey
A survey by the Angus Reed Institute suggests that nearly half of Canadians say they are in a worse financial position now than a year ago, and 34% say they will be worse off next year.
As a result, 22% of Canadians with a mortgage say their payments have increased; more than half say they fully expect theirs to rise, 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 outrageous, 66 percent say, forcing them to seriously consider changing plans.
Tenants also feel exhausted, with more than half saying it is difficult to afford a monthly rent.
WATCH | Wealthy Barber discusses 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 gas prices and grocery bills amid stagnant wages have hit low-income Canadians hardest.
“I think you’ll see central banks around the world continue to raise interest rates to curb inflation,” Chilton said.
“It affects people, and I think they’re going to raise rates until they do something wrong.”
As for their confidence in the Bank of Canada, Canadians are divided: just under half (46%) say they believe the bank is fulfilling its mandate adequately, while slightly less (41%) say they believe otherwise.
Three-quarters of Canadians are unhappy with the way the provinces are coping with rising inflation.
The study, conducted online, examined 5,032 adult Canadians who are members of the Angus Reed Forum between June 7 and 13. For comparison purposes, a probability sample of this size carries an error margin of +/- 2 percentage points, no – said the profit.
In April, while announcing an interest rate hike, Bank of Canada Governor Typh McLem told reporters that the bank was trying to bolster inflation expectations.
“The longer inflation stays well above our target, the greater the risk that Canadians will start to think that this higher inflation will continue, and this is embedded in their inflation expectations.”
“The need to make sure that inflation expectations remain tied to our 2 percent target was reflected in our decision today.”
About two out of five Canadians also have credit card debt, an increase of 62% among those who qualify as “struggling” in the Angus Reed Institute’s economic stress index.
Within this group, about 58% say it will take more than a year to pay off these debts.
This is a very “unusual time,” says Chilton.
“I think everyone should approach from their individual point of view… I always believe that you have to keep track of your expenses, but this is more true now than ever.”
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