Over Half Of Canadians To Cut Back on Holiday Spending

© Reuters.

By Ketki Saxena 

Investing.com -- According to a survey by Angus Reid Institute, Canadians will be cutting back on spending this holiday season. 

As inflation and rising interest rates cut into discretionary income, 64% of Canadians are projected to have slashed their discretionary spending ahead of the holidays - a 7% increase since August. 

56%  plan to spend less over the holidays including on presents, decorations, entertaining, vacations, and charity. 37% have cancelled or modified their vacation plans, up 5% from August. Another 37%  say they have scaled back charitable giving in recent months,

“Half say they are financially worse off now than they were at this time last year, the highest level seen in ARI’s [Angus Reid Institute] tracking dating back to 2010,” the report said.

Canadians’ financial optimism has also dropped over the past two years.

About one-third of Canadians (31%) are pessimistic about their financial situation heading into 2023, which is a two per cent increase from a year ago. 41% think there will be no material change to their finances, while only 20% see their finances improving in the next year. 

Canadians are increasingly cutting back on discretionary spending, as well as spending on necessities as decades-high inflation and rising loan payments eat into budgets. 

In October, inflation remained steady at 6.9%. Food prices increased by 10.1% year over year in October, while gasoline pries were up 17.8% year over year. Mortgage costs rose 11.4% year over year, while rents, as per Statistics Canada, rose 4.7% year over year.

A separate report by Rental.ca however noted that average rental prices across Canada increased 11.8% year over year, as of October, but as much as 24% in Toronto.