Consumers continue to labour under the central bank's rate moves
Younger Canadians, who account for a significant portion of the home-purchasing market, have been the hardest hit by the decrease in financial power brought about by the central bank’s outsized rate hikes, according to a new survey by MNP LTD.
Canadians in the 18-34 age bracket registered the largest quarterly decrease in their average month-end finances during Q3, falling by $273 to $606. This drop was significantly larger than the national average across all demographics (decreasing by $37 quarterly to $654), despite the lower number of Canadians finding themselves closer to insolvency (down by six points to 46%).
“The impact of this year’s consecutive interest rate hikes and persistent inflation is becoming clear, as Canadians are seeing the effect on their wallets,” MNP said in its report.
“Canadians are putting more of their paychecks towards paying for basic necessities as the cost-of-living rises, which in turn is leaving less of a financial buffer to manage the impacts of current and potential future interest rate hikes,” said Grant Bazian, president of MNP LTD.
“Younger Canadians are feeling the squeeze of inflation more than the rest, and will be more vulnerable to economic changes as a result.”
Compared to the end of 2021, more Canadians said that it is becoming less affordable to feed themselves and their families (up by five points to 52%), put money aside for savings (up by five points to 49%), pay for transportation (up by nine points to 45%), pay for clothing or other household necessities (up by five points to 45%), and pay for housing (up by two points to 37%).