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Canadian millennials are feeling sick to their stomachs about inflation after it reached heights last year not seen in decades.
More than three-quarters of millennials say high inflation has left them “with a pit in my stomach,” according to research from Meridian Credit Union in partnership with Maru/Blue. That’s leaving them stuck in “financial paralysis” and 62 per cent say they have doubts about the future of their finances.
Millennials, defined by Meridian as people between the ages of 26 and 41, aren’t the only generation to worry. Even more gen-Zers — ages 18 to 25 — are battling financial fear, with 88 per cent reporting anxiety over price increases. In comparison, 72 per cent of gen-Xers (aged 42 to 57) and 58 per cent of baby boomers (aged 58-plus) expressed the same anxiety.
It shouldn’t be a shock that younger generations are struggling to navigate price increases. The rate of inflation peaked at 8.1 per cent in June, the highest level since the 1980s. Though it’s since moderated to 6.3 per cent in December, consumers continue to deal with sticker shock. Prices of groceries, for example, have climbed by around 11 per cent over the last four months. And the pain isn’t over yet. Canadians can expect to pay up to $1,065 more for food in 2023, predicts the Agri-Food Analytics Lab at Dalhousie University in it’s latest food price report.
A series of aggressive interest rate hikes meant to get price growth under control have added to costs. The Bank of Canada’s key policy rate rose to 4.25 per cent last year from 0.25 per cent, with another hike expected this morning. Those rate increases have increased the costs of borrowing money, including for mortgages.
“This is the first time millennials’ money resilience has been tested in a high inflation economy, so it’s not surprising that millennials and gen-Zs surveyed were the most likely to agree they ‘feel financial paralysis and uncertainty’ when it comes to financial planning and investing,” said Naveen Senthamilselvan, Meridian’s director of Strategic Initiatives, in a news release.
Indeed, a volatile stock market has made millennials wary about investing, and more than three-quarters fear the market won’t bounce back as quickly as expected.
Overall, Canadians aren’t very optimistic about inflation cooling off and less than half think price increases are set to slow in the months ahead, the survey said. They also have a sour view of housing affordability with a majority expecting the costs of owning a home to stay high.
That’s not to say people have completely given up hope. Seventy per cent of millennials think their finances will hold up through inflation, and more than half say they’re optimistic the year ahead will be better. That optimism is driving many to want to take stock of where their money is going to “refresh” their finances.
Meridian said one way to do that is for millennials to get over pessimism about investing and put their money to work.
“My advice to my fellow millennials is to consider getting back into the market now and stagger your investments over time with the support of a professional you trust,” Senthamilselvan said.
“If you have the means, now is a good time to invest in your financial future.”
