Good morning,
For a growing number of Canadians belt-tightening isn’t enough any more.
After more than a year of skyrocketing prices for everything from food to rent, 40 per cent of Canadians surveyed in a recent poll by Angus Reid Institute said they have been forced to draw money from savings accounts they normally try not to touch.
The latest reading of inflation in this country came in at 5.2 per cent in February. While that’s the slowest increase since the beginning of 2022, it’s still a long way from the Bank of Canada’s comfort zone of one to three per cent.
Moreover, grocery prices remain the biggest contributor to high inflation, with food prices up 10.6 per cent in February from last year, the seventh double-digit increase in a row.
Governments have tried to help. The Federal Budget tabled last month offers a one-time grocery rebate for lower income households, but the payment that tops at $467 won’t go far.
One in three (34 per cent) of the Canadians in the Angus Reid poll say they are either in “bad” or “terrible” shape financially, a six-point increase from last July. It’s also the highest level of Canadians struggling since Angus Reid Institute began asking this question near the beginning of the COVID-19 pandemic.
Back in April 2020, when many were thrown out of work because of pandemic lockdowns, 27 per cent said they were in bad or terrible shape financially.
“The fact that more describe themselves in bad shape financially now perhaps speaks to how challenging recent months have been for Canadians,” said the report.
Nine out of 10 of the people in “terrible” shape say it is difficult to feed their household.
The struggles vary across the country. More than half (51 per cent) of people in Saskatchewan describe themselves as in bad shape or worse, the highest in the country. In Atlantic Canada 20 per cent say they are barely getting by, twice the national average.
People are trying to cope by cutting back on spending. Two thirds of the people polled (67 per cent) said they are reducing discretionary spending to save money, more than last year, and 43 per cent said they have delayed a major purchase.
The cutbacks also extend to retirements savings. The number of Canadians who deferred contributing to an RRSP or TFSA has risen from 22 per cent in February 2022 to 26 per cent last September to 35 per cent in the most recent survey.
Others have had to take more drastic action, the report says. At least a third of all income brackets say they have had to dip into savings to help cover living expenses.
Thirteen per cent of those polled have had to borrow money from family and friends, 11 per cent have had to sell assets, eight per cent have taken a loan from a bank and four per cent have gone to pay-day loan companies.
At 61 per cent, people in Saskatchewan were the most likely to be drawing money from savings to make ends meet.
While in Quebec, where social support is higher, 59 per cent said they had not needed to do any of these measures to pay expenses, the highest percentage in the country.
The Angus Reid Institute survey was conducted between March 30-31, 2023, with a sample of 1,600 Canadians. The margin of error is 2 percentage points.
