By: Dhevin Indar
Inflation is the change in the average price level. Each one of us has our own experience with inflation based on what we buy each month. The CPI measures and represents the big picture of consumer spending across Canada. It is the most common measure of inflation used by businesses, governments and institutions. Inflation in Canada hasn’t been this high since January 1991, peaking at 6.8 percent in April.
Most Canadians are adjusting their spending habits by either cutting back on expensive items, postponing big purchases, borrowing from friends or pulling from their savings. Expert Mohini Sharma advises people to be cautious while spending. Ashvin Singh has had to change his spending habit of not eating out as much as he used to.
Finding Other Ways to Save
According to a recent survey nearly 75 percent of Canadians have had to change their daily spending habits to meet daily expenses due to rising costs with nearly half delaying purchases and more than a quarter resorting to borrowing money from family and friends. The survey found most Canadians are being affected by rising food prices, followed by increasing housing costs and growing transportation costs. With increased borrowing more Canadians are finding it difficult to save.
Most People are seeking out sales and promotion to get deals on items. 47 percent of people purchased cheaper alternatives or brands and 45 percent delayed making a purchase. These are habits Canadians have come to get used to.
According to the latest CPI numbers March showed how widespread inflationary pressures were with prices rising in all major categories including food, shelter, transportation and gasoline prices.
Inflation increased at a faster pace in March than February in every province. A high price growth was seen in Prince Edward Island followed by New Brunswick, Manitoba and Ontario. In the Atlantic provinces the price growth was driven by fuel oil and other fuels and the gains in Manitoba and Ontario were led by gasoline.
Canadians struggling to put food on the table are turning to community organizations for help. According to the center, customers are spending twice as much at the market than they used to a few months ago.
Derek Barnes, a community engagement facilitator said “people come who never used to come. For the first time they’re saying, “These prices might be too much for me.” Barnes also added it’s time for governments to ensure people have sufficient incomes so they don’t need to rely on assistance from emergency food organizations. The NDP has called on the federal government to provide immediate relief by doubling the GST tax credit and boosting the Canada Child Benefit by $500.
Canadians Resorting to Debt
A new survey from Finder.com has found many Canadians are now turning to debt to keep up with their expenses. Taking on debt to pay bills often means taking on personal loans. One in four Canadians admitted to doing so to cover their expenses. Paying bills, consolidating debt and covering living expenses after losing a job are the most common reasons for taking on debt.
Other important expenses such as buying a car, education and home renovations weren’t too far behind. This has led to many Canadians reporting a reduction in spending. Nearly 60 percent reported spending less on luxuries such as clothing or entertainment, while 43 percent said they reduced the amount they spend on major purchases such as trips or renovations.
Middle-income earners are really struggling. Data shows wages are not keeping pace with higher living costs and forces many to prioritize their expenses to find ways to make ends meet.
The survey found young adults in Canada have been hit the hardest. 26 percent of respondents aged 18 to 26 reported taking on debt to pay for expenses. Many Canadians listed housing expenses as their top concern when asked how inflation was affecting their household budgets.
This year 1.3 million people over the age of 18 reported being behind on their rents or mortgages. The survey found renters are more at risk than homeowners with mortgages. Nine percent of renters are estimated to fall behind on payments as opposed to six percent of homeowners. Sharma says to combat inflation it starts with the government. Changes at the federal level starts with the interest rate and says whatever happens with the interest rate will affect the pockets of Canadians.
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