Canadians face personal finances deterioration amid growing inflation numbers

The latest survey shows that Canadian households are facing a significant deterioration of their finances amid growing inflation and interest rates. This is a worrying trend that could be followed by an economic slowdown.

According to the recent Nanos Research for Bloomberg News, the number of Canadians whose finances are worse today than a year ago went up to 41%, marking the second highest result since 2008. Another poll by Angus Reid says 28% of Canadians expect their finances to keep worsening during the next year, which is also a record high level.

Such a pessimistic financial picture will bring some doubts over the ability of the nation’s households to cope with the influence of higher inflation. Another question is also whether consumers could continue supporting the nation’s expansion. Meanwhile, most economists believe Canada’s economy will show strong growth in 2022, because consumer spending is expected to remain strong.

One of the issues could be declining real incomes, with average wages in Canada showing only half the growth compared to inflation paces. Indebted Canadians are facing higher interest rates, as the central bank tightens its monetary policy in attempt to cool price pressures.

In addition to it, households are also dealing with the possibility of a significant slowdown in real estate, which has been a main resource of new wealth during the pandemic for many homeowners.

Each week, Nanos Research surveys 250 Canadians to find out their opinion on personal finances, job security, national economy and housing prices. Bloomberg publishes four-week average results based on 1,000 telephone responses.

The Bloomberg Nanos Canadian Confidence Index, showing the consumers’ sentiment, was down to 53.2 last week, marking the lowest result since November 2020.

Almost 54% of Canadians believe real estate prices will keep rising, which is less than 55% seen during the previous week and 64% reported last month. Nevertheless, even with the decrease, real estate price expectations still exceed historical averages.

When it comes to Canadians’ forecasts for the national economy, the results are not very optimistic, as only 18% of respondents expect the economy to strengthen during the next six months and 52% predict a slowdown.