Canadians suffering from ‘inflation isolation,’ poll finds

People are staying home and doing less socializing to save money

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It isn’t just Canadians’ pocketbooks that are feeling the pressures of inflation.

A new study out today by insolvency firm MNP Ltd finds that Canadians are struggling with “inflation isolation” as higher interest rates and rising prices crimp their social lives and standard of living.

Half of the people polled by Ipsos for the MNP survey say that to save money they are staying home more often and a third are socializing less. This is especially evident in younger Canadians and those with an income of less than $40,000, the survey said.

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This, in turn, has an impact on their mental health. Twenty per cent say they are experiencing a sense of social isolation and 19 per cent, a sense of loneliness.

“High inflation and interest rates are not just impacting Canadians’ finances, they are having a significant effect on their mental health as well. The pressure to manage increased costs of basic necessities and mounting debt is causing anxiety and stress,” says MNP president Grant Bazian.

“Canadians are retreating from social activities, forgoing time with friends and family to cut down on costs, illustrating the isolating impacts of inflation.”

The survey also provides a glimpse at Canadians’ growing debt burden.

Credit card balances hit a record high of $107.4 billion in the second quarter, with average non-mortgage debt for consumers rising to $21,131, according to Equifax Canada.

A third of those in the MNP survey are paying more for monthly debt payments than they were a year ago and for one in five those additional payments are more than $200. The rise in debt payments is even higher for people whose income is greater than $60,000 and those aged 35 to 45.

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Canadians are increasingly pessimistic about their ability to cope financially, the poll reveals. Almost 30 per cent fear they will not be able to cover an unexpected auto repair, and 33 per cent are not confident they will be able to deal with the loss of their job or change in their wage.

Nearly half of respondents say they don’t believe they will be able to cover their living expenses over the next 12 months without going further into debt, up two percentage points from the previous quarter.

“Debt has a way of isolating individuals, both emotionally and socially. It can feel like an overwhelming burden that separates us from friends and family. It’s not uncommon for those burdened by debt to withdraw from social activities and relationships out of shame or fear of judgment,” said Bazian.

The MNP survey echoes findings by the National Payroll Institute.  Its annual survey found that the number of working Canadians classified as being financially stressed has jumped by 20 per cent in the past year to reach 37 per cent.

“It’s surprising, 35 per cent of the growing stressed cluster actually earn more than $100,000 per year,” said Chuck Grace, managing director of Canada’s Financial Wellness Lab that conducted the survey.

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The majority of this group, 63 per cent, are spending all of their net pay to make ends meet and 30 per cent are spending more than that, taking on more debt or tapping their savings each month.

“As a consequence, 66 per cent of the financially stressed cluster is living paycheque to paycheque, and 50 per cent are overwhelmed by their debt,” said the survey.

An “alarming” 55 per cent of Canadians who are financially stressed say they feel more isolated because of the rising costs of living. with many of them reporting that stress is affecting their relationships and productivity at work.


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Retail sales
National Bank of Canada

Retail sales beat expectations in September, rising 0.6 per cent. Gains were led by car and parts dealers, which were up 1.5 per cent. October sales were up 0.8 per cent, the biggest jump since April, according to an early estimate by Statistics Canada.

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The burst, however, may be short-lived, say economists at National Bank of Canada. Sales at new car dealers got a boost from end of the Port of Vancouver strike in August. “We remain pessimistic for that segment in a context in which financing costs have risen substantially,” said National.

Consumer confidence data from the Conference Board of Canada supports this, showing that the percentage of those polled saying now is a good time to make a major purchase of a car or a home has fallen to an all-time low. On an annualized basis, real retail spending dropped 2.1 per cent in the third quarter, which will likely drag on GDP growth, said National.

  • Canada’s big banks will report their latest quarterly results this week, where further signs of a slowing economy are expected to emerge. Scotiabank will report its fourth-quarter figures on Tuesday followed by Royal Bank of Canada, TD Bank Group and CIBC on Thursday. BMO Financial Group and National Bank of Canada are scheduled to report their results on Friday.
  • The CRTC’s public hearing on modernizing Canada’s broadcasting framework enters its second week. The federal regulator is holding three weeks of hearings as part of its public consultations in response to the Online Streaming Act. Last week, Bell Media-owner BCE Inc. said it wants the broadcasting regulator to create a news fund that would provide money to broadcasters and require foreign streamers to contribute to the subsidy through their Canadian content spending
    — The Canadian Press
  • Today’s Data: U.S. new home sales
  • Earnings: Alimentation Couche Tard Inc

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Stock markets November 27, 2023

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Today’s Posthaste was written by Pamela Heaven, @pamheaven, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.

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