A new poll shows that Canadians are making increasingly difficult budget decisions due to rising interest rates and inflation.
The MNP Ltd. poll, conducted by Ipsos in early June, suggests more than a quarter of Canadians are cutting back on basic expenses like food, shelter and utilities.
The poll found that nearly half of respondents restrict non-essential spending on outings like travel, dining and entertainment.
Around a third of respondents also said they buy cheaper versions of everyday items and drive less to save on fuel costs.
The results suggest that Canadians are making tough choices as higher costs weigh on household budgets.
Grant Bazian, chairman of insolvency firm MNP, says Canadians are trying to adjust their budgets and cut costs where possible to meet their monthly bills.
But he warns that the situation is likely to get worse before it gets better as the cost of living continues to rise.
“Households will have to make increasingly difficult choices about what to cut and could find themselves going into debt to make ends meet,” Bazian said in a statement Monday.
Half of survey respondents said that if interest rates rose much more they would be in financial trouble, with four in 10 saying higher rates could bring them closer to bankruptcy.
Economists predict the Bank of Canada will raise its key interest rate by three-quarters of a percentage point on Wednesday as inflation rages around the world.
The central bank raised its key rate by half a percentage point on June 1, bringing it to 1.5%. Since then, he has signaled a willingness to move in a more aggressive direction.
“With inflation approaching its highest level in 40 years, there is growing pressure for more aggressive interest rate hikes to bring inflation under control,” Bazian said.
“Canadians who are not financially prepared to absorb future interest rate increases risk finding themselves in financial difficulty.”
The online survey of 2,000 Canadians was conducted June 6-9.
The polling industry trade body, the Canadian Research Council, says online polls cannot be assigned a margin of error because they do not randomly sample the population.
This report from The Canadian Press was first published on July 11, 2022.
The Canadian Press