Price shock: How Canadians are coping with the rising cost of living

Asian women stressed over the price of her groceries

Canadians are feeling the heat as rising inflation, increasing interest rates, and higher debt loads are scorching their finances.

After slashing interest rates to near zero early in the pandemic, the Bank of Canada raised its benchmark interest rate eight times over the last year to tame inflation—which is at the highest level in decades. On top of that, total consumer debt climbed to $2.36 trillion, with average non-mortgage debt per consumer sitting at more than $21K.

Rising costs are taking a toll on nearly all Canadians. However, the impact is felt more acutely by low-income households and those carrying debt. In fact, according to our recent survey, more than a quarter of Canadians (27%) say they can’t afford any additional increases in monthly living expenses and financial obligations; low-income households (<$50k) are more than twice as likely as high-income households ($100k+) to say this.

Further insights from our survey are illustrated in the following infographic.

Infographic showing key findings of Grant Thornton Limited's 2023 Consumer Debt Insights Report. Find transcript below.

Transcript: Price Shock: How Canadians are coping with the rising cost of living
For many Canadians, 2022 was a challenging year as interest rates climbed, personal debt increased, and inflation soared. Though inflation has been easing gradually, it comes at the cost of several interest rate hikes from the Bank of Canada. The rising cost of living continues to affect consumers in 2023, causing financial hardship and decreasing purchasing power.

How are rising costs impacting Canadians in 2023?
– 84% are concerned about the impact increased costs are having on their expenses and financial obligations.
– 69% say they’ve had to reduce non-essential expenses.
– 32% say they’ve had to cut back on essential spending, like groceries and medication.
– 27% cannot afford any additional increases in monthly living expenses and financial obligations.

How can consumers get on a solid financial footing?
To manage through these challenging times, consumers should focus on what they can do rather than what’s out of their control. Setting a budget, limiting non-essential spending, and settling debt are just a few things they can do now to thrive in the future.

About the survey.
These are the findings of a study conducted by Grant Thornton in January 2023 among a nationally representative sample of 1,515 Canadians balanced and weighted on age, gender, region, and education. The survey was offered in both English and French. For comparison purposes only, a sample of this size would yield a margin of error of +/- 2.5 percentage points at a 95% confidence level.

If you’re one of the many Canadians struggling to make ends meet due to increased living expenses and debt, we can help. Book a free, no-obligation consultation to learn more.

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