Canadian consumers are planning to significantly reduce their holiday expenses due to the rising inflation and soaring interest rates, according to a poll conducted by BMO (TSX:BMO) Bank. The survey revealed that 78% of respondents intend to buy fewer gifts this year, while 40% are considering less expensive alternatives.
The poll surveyed 2,502 adults and found an increase in financial insecurity. Nearly one-third of the respondents reported feeling less financially secure than they did the previous year. The majority of consumers anticipate a three-month period to settle their holiday bills, but a concerning 24% doubt their ability to meet this timeline.
The decision to cut back on holiday spending comes amidst Canada's persistent inflation rate of an annualized 3.8%, which exceeds the Bank of Canada's target of 2%. In response to this, the central bank has raised its overnight interest rate to an unprecedented 5%, a level not seen for over two decades. This move has led to credit card, mortgage, and loan interest rates reaching multi-year highs.
Despite these economic challenges, a steady 33% of respondents intend to maintain their previous level of charitable donations.
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