Canadian households are reporting a deterioration in their finances as inflation remains
stubbornly high and interest rates rise, according to a new poll.
The number of Canadians who say their finances are worse today than a year ago has reached
41%, according to a new survey by Nanos Research. That’s the second highest reading going
back to 2008.
A separate poll released earlier this week by Angus Reid found that 28% of Canadians believe
their finances will continue worsening over the next year -- a record high for that question.
The deteriorating financial picture casts doubt over how well Canadian households are coping
with the impact of higher inflation, and whether consumers can continue driving the nation’s
economic expansion. Most economists forecast that Canada’s economy will produce strong
growth this year because consumer spending is expected to remain strong.
However, average wages in Canada are growing at only about half the rate of inflation, which
has accelerated to its fastest pace in 30 years. Additionally, indebted Canadians are getting hit
by higher interest rates as the Bank of Canada tightens monetary policy to lower consumer
prices.
Households are also facing the prospect of a sharp slowdown in housing, which has been a
major source of wealth generation throughout the pandemic.
About 54% of Canadians expect home prices to continue increasing, down from 55% the
previous week and as high as 64% last month. Even with the decline, however, housing price
expectations remain above historical averages.
Canadians’ outlook for the economy is souring. Only 18% of respondents said they expect the
economy to strengthen over the next six months, while 52% see it weakening.
Each week, Nanos Research surveys 250 Canadians for their views on personal finances, job
security, the economy and real estate prices.
The Nanos Canadian Confidence Index, a measure of sentiment based on the polling data,
dropped to 53.2 last week, its lowest reading since November 2020.
