Majority of Canadians making tough decisions to handle cost-of-living crisis

More than a year into a stubborn and persistent cost-of-living crisis, a considerable number of Canadians have progressed from belt-tightening on spending to drawing on existing savings to make ends meet.

The latest data from the non-profit Angus Reid Institute finds two-thirds of Canadians reporting cutting back on discretionary spending in recent months – a number 14 points higher than reported around this time last year.

However, for millions, penny-pinching doesn’t go far enough. Two in five (40%) say recent challenges have forced them to draw money from accounts that they try not to touch, and one in three (35%) say they deferred a contribution to their RRSP or TFSA.

For one-in-ten the situation has been so difficult they’re either borrowing from friends and family (13%), selling assets (11%), or seeking out a bank loan (8%).

Little wonder then, that fully one-in-three (34%) Canadians say they’re in either “bad” or “terrible” shape financially. This represents a six-point increase from last July. Those individuals continue to struggle with food costs, for which inflation remains significantly higher at approximately 10 percent. Among those who say they are in “terrible shape” financially, nine in ten (94%) say it is difficult to feed their household. Four in five (80%) say this among the group who are in self-described “bad shape”.

The federal government recently tabled a budget including policy measures, such as a one-time grocery rebate, designed to alleviate the financial pressure that many individuals and households are feeling.

And while these moves may provide some relief to some households, persistent challenges remain, perhaps exacerbated for nearly half of the Canadian workers (45%) who say they have not received additional compensation from their employer over the past 12 months.

Key Findings:

• The percentage of Canadians saying they deferred contributing to an RRSP or TFSA recently has risen from 22 percent in February 2022, to 26 percent last September, to 35 percent in this most recent data.
• Part-time workers are much less likely to have received additional compensation over the past year (35%) compared to those who work full-time (58%).
• More than half of Canadians whose household income is lower than $50,000 per year (54%) say they are in poor or terrible financial shape. The number saying this drops to one-third (33%) for household incomes between $50,000 and $99,999, and one in five (21%) for those in households earning $100,000 or more.