Incomes Not Keeping Up With Inflation

Almost half (41 per cent) of Canadians say their household finances were worse than planned in the third quarter of 2022, up four percentage points from the third quarter of 2021. While the vast majority (81 per cent) say their household income either stayed the same or increased over the last three months, this sentiment likely reflects rising inflation and the impact of higher interest rates on disposable income and buying power. Growing cost concerns gripped many households: 69 per cent say inflation is the first or second biggest concern affecting their household finances in the next six months. Looking long-term, nearly one-third (29 per cent) of Canadians express pessimism about household finances in the next 12 months, up five percentage points from a year ago. As a result, more than half (54 per cent) of Canadians have reduced discretionary spending. Some of their proactive measures include paying down debt faster, saving more money in an emergency fund, cutting back on retirement savings, increasing usage of available credit, and using retirement savings.